ADVANCED BRAKING TECHNOLOGY LTD
AND CONTROLLED ENTITIES
ABN 66 099 107 623
ANNUAL REPORT
2017
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
ADVANCED BRAKING TECHNOLOGY LTD
AND CONTROLLED ENTITIES
ABN 66 099 107 623
CORPORATE DIRECTORY
Company Secretary
Neville Walker
Bankers
National Australia Bank Ltd
12 / 100 St Georges Terrace
Directors
Bruce Grey
David Slack
Adam Levine
Mark Lindh
Registered Office
19 Creative Street
Wangara, WA 6065
Telephone: + 61 8 9302 1922
Perth, WA, 6000
Manufacturing Partners
Harrop Engineering
Preston, Vic.
Connect Source
Midvale, WA
FMP Group
Ballarat, Vic.
Parker Hannifin
Dandenong South, Vic.
Hofmann Engineering
Bassendean, WA
Auditors
Moore Stephens
Level 15, Exchange Tower
2 The Esplanade
Perth, WA, 6000
Share Registry
Computershare Investor Services Pty Ltd
Level 11, 172 St Georges Terrace
Perth, WA, 6000
Telephone: + 61 8 9323 2000
Facsimile: + 61 8 9323 2033
Solicitors
Harris Carlson Lawyers
Level 14, 350 Queen Street
Melbourne, Vic, 3000
ASX Home Branch
Country of Incorporation
Australian Securities Exchange (ASX)
Australia
Level 40, Central Park
152-158 St George’s Terrace
Perth, WA, 6000
ASX Code
ABV – Ordinary shares and options
Legal form of entity
Listed public company
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
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TABLE OF CONTENTS
TABLE OF CONTENTS
CORPORATE DIRECTORY
TABLE OF CONTENTS
CHAIRMAN’S REPORT
CHIEF EXECUTIVE OFFICER OPERATING AND FINANCIAL REVIEW
CORPORATE GOVERNANCE STATEMENT
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE
YEAR ENDED 30 JUNE 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE
YEAR ENDED 30 JUNE 2017
NOTES TO THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED 30 JUNE 2017
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
STOCK EXCHANGE INFORMATION
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ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
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Advanced Braking Technology Ltd
CHAIRMAN’S REPORT
CHAIRMAN’S REPORT
Dear Shareholder,
The 2016/17 financial year has proved to be a key turn-around year for ABT with record operating revenue and a
positive EBITDA in the final quarter.
The Board has continued to support management’s strategy of innovation in seeking to develop more broadly
appealing products and markets. It has been disappointing that the new Terra Dura® polymer brake has experienced
quality and supply teething problems, but it is now pleasing that clear strategies are in place to achieve targeted
production run rates by early 2018.
The Board remains of the view that ABT is primarily an application engineering company, which has benefited from
substantial foundation research and development into sealed and wet brake technology. As I noted last year, the
market continues to demand more cost-effective and innovative solutions. In addition, new markets such as surface
mines, construction and utilities are now understanding the financial benefits and rapid pay-back and clear safety
potential of the ABT’s brake offerings.
The combination of this greater product and customer diversity, together with the company’s push to expand its
international markets are, in the boards view, the essential ingredients to commercial prosperity.
Once again, I would like to express my gratitude to existing shareholders for their support.
Graeme Sumner resigned in July 2017 to take up a CEO role back in New Zealand and was replaced in August 2017 by
Peter Hildebrandt. Peter’s appointment is timely, as he has a very strong background in supply chain and distribution
channels, along with experience in automotive and industrial markets and combines these with excellent business
qualifications, which include an Executive MBA. Peter also has a track record in technology and innovation driven
markets and applications.
Finally, I would like to thank Graeme Sumner and the management team for their efforts this year.
Bruce Grey
Chairman
4
Advanced Braking Technology Ltd
CHIEF EXECUTIVE OFFICER OPERATING AND FINANCIAL REVIEW
Chief Executive Officer’s Operational Review.
Financial Summary
Throughout the year, ABT continued to transform through diversifying its products and broadening both its
geographic and market reach, the full benefits of which became evident in FY17 and is expected to continue
the strong growth trend into FY18 and beyond. ABT’s total revenue for FY17 of $7.7m, was up 44% from
FY16. A net loss of $0.6m was recorded, which was a significant improvement on the FY16 loss of $1.8m.
The last quarter of FY17 was particularly pleasing in that it produced the highest and second highest monthly
operating revenue recorded by ABT, as well as a positive EBITDA for the Quarter.
Operating Revenue
The accelerated operating revenue growth in FY18 and beyond is primarily driven by the introduction of the
new, cost effective Terra Dura® brake, which is appealing to a much broader range of industries that operate
under harsh conditions, such as surface mines, civil construction such as tunnels, utilities, forestry, etc.
Expenses
Expenses continued to be tightly controlled, with the only major increases being in consulting fees,
advertising and Research & Development driven by the introduction of the new Terra Dura® brake, as well
as costs associated with relocating premises.
ABT relocated its premises on 30 June 2017. This move has not only materially reduced the Company’s
leasing cost, but is the culmination of twelve months of planning and meets the multiple strategies of
improved OH&S, upgraded IT and Communications infrastructure and security, increased leveraging of
technologies, and improved staff amenities.
The new facility will also allow the Company scope to expand its operations from what is expected to be a
period of growth in the next 12 months.
Product Development
The company made particularly good progress during the year in bolstering its high end, high value driveline models,
releasing five new products to the market. These were;
• The new Medium Vehicle (MV) 16 driveline brake for the Isuzu FSS 550 series 10 Tonne truck. This high-end
brake serves as a fail-safe brake for mining customers. It has recently had its first installation.
• The upgraded Medium Vehicle (MV) 16 driveline brake for the Isuzu FTS 800 series 13.5 Tonne truck. It has
been installed on 9 vehicles so far.
• The new Light Vehicle (LV) 21 driveline brake for the Isuzu NPS 300. This product has just been released. It
has been installed on 3 vehicles so far and there are several prospects that the Company is currently providing
quotes for.
• An upgraded LV 21 driveline brake for the 8 Tonne Mitsubishi Fuso Canter. ABT supplied the first 9 brake sets
of this product to a customer in Mongolia. And;
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
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Advanced Braking Technology Ltd
CORPORATE GOVERNANCE STATEMENT
• The Terra Dura® brake for the Isuzu NPS 300. This high end, non-fail safe, steel housed wet brake was the
forerunner of the Terra Dura® polymer brakes and was designed with specific markets such as Indonesia in
mind. ABT shipped 46 sets to Indonesia in the financial year with several more orders received for delivery in
the current quarter.
Terra Dura® Polymer Brake
The first sets of the new polymer Terra Dura® brakes commenced commercial deliveries in July 2017.
As advised to the market, the quality and production issues continued up until June 2017 and initial product volumes
are trailing the current demand for the new product. Strategies are in place to ensure that the targeted, monthly
production run-rate is achieved by early 2018.
The first sets of the polymer Terra Dura® brakes will be specifically deployed on 70 series Landcruisers, satisfying
existing orders. Over 90% of the parts delivered will be common to the Landcruiser and the next 2 models for release;
the Isuzu DMAX and the Toyota Hilux. As a result, these models are now expected to be available to the market in
early 2018.
Trailer Brakes
ABT’s trial of its trailer brake solution continued to prove successful, reaching 230,000kms on rough roads before
requiring its first service. The trial has now been concluded. ABT sees opportunities for this product in a range of heavy
haulage applications and is continuing to pursue commercial opportunities for the product.
In the meantime, the Company is directing its production resources towards delivery of its Terra Dura®
and SIBS® products, where demand is established.
Outlook
FY17 was a watershed year in ABT’s history, with record operating revenue and a financially positive last quarter. The
company expects stronger trading conditions to remain throughout the financial year as a result of continuing, steady
demand for the SIBS® products, expanded range of products and markets. In particular, we expect the new Terra
Dura® polymer brake to make a meaningful contribution to FY18 earnings.
In support of this growth trajectory, efforts are being accelerated for the deployment of supply chain excellence on
one side and for the development of a comprehensive distribution and channel partner engagement model on the
other. Those activities will be complemented by structural adjustments to ensure the Company’s organisation is
focused on achieving it business outcomes.
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Advanced Braking Technology Ltd
CORPORATE GOVERNANCE STATEMENT
Acknowledgements
Finally, I would like to thank the board and ABT staff members for their continued support and look forward to driving
the continued revenue growth and improved profitability of ABT.
Peter Hildebrandt
Chief Executive Officer
7
Advanced Braking Technology Ltd
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Advanced Braking Technology Ltd has adopted the following set of principles for the corporate
governance of the Company. These principles establish the framework of how the Board carries out its duties and obligations on
behalf of the Shareholders.
ASX BEST PRACTICE RECOMMENDATIONS
The ASX Listing Rules require listed companies to include in their annual report a statement disclosing the extent to which
they have complied with the ASX Best Practice Recommendations in the reporting period.
These recommendations are
guidelines designed to produce an efficiency, quality or integrity outcome. The recommendations are not prescriptive so that
if a company considers that a recommendation is inappropriate having regard to its particular circumstances, the company has
the flexibility not to follow it. Where a company has not followed all the recommendations, the annual report must identify
which recommendations have not been followed and give reasons for not following them.
Details have been included at the end of this statement setting out the ASX Best Practice Recommendations with which the
Company has and has not complied in the reporting period.
Details of the Company’s corporate governance practices in the relevant reporting period are set out below.
THE BOARD OF DIRECTORS
Role of the Board
The primary responsibilities of the Board are set out in a written policy and include:
the establishment of the long-term goals of the Company and strategic plans to achieve those goals;
•
• monitoring the achievement of these goals;
•
•
the review of management accounts and reports to monitor the progress of the Company;
the review and adoption of budgets for the financial performance of the Company and monitoring the results on a regular
basis to assess performance;
the review and approval of the annual and half-year financial reports;
nominating and monitoring the external auditor;
approving all significant business transactions;
appointing and monitoring senior management;
all remuneration, development and succession issues; and
ensuring that the Company has implemented adequate systems of risk management and internal control together with
appropriate monitoring of compliance activities.
•
•
•
•
•
•
The Board evaluates this policy on an ongoing basis.
Board composition
The Directors’ report contains details of the Directors’ skill, experience and education. The Board seeks to establish a Board that
consists of Directors with an appropriate range of experience, skill, knowledge and vision to enable it to operate the Company’s
business with excellence. In particular, the Board seeks a cross section of experience in commerce, technology and in related
industry sectors as well as experience on Boards of other public listed companies. To maintain the balance of skills and experience,
the Company’s policy is that non-executive Directors should serve at least 3 years. At the completion of the first 3 years, the
position of the Director is reviewed to ascertain if circumstances warrant a further term.
The Board normally comprises three non-executive Directors and one executive Director. Details of the Directors are set out in the
Directors’ Report.
The Board requires that the Chairperson should be an independent director and that the role of Chairperson and Chief Executive
Officer should not be exercised by the same individual. The role of the Chairperson has been fulfilled by Mr Bruce Grey and the role
of Chief Executive Officer has been fulfilled by Mr Graeme Sumner during the financial year ended 30 June 2016.
Appointment of Directors
The Board is primarily responsible for identifying potential new Directors but has the option to use an external consulting firm to
identify and approach possible new candidates for Directorship. The Directors may at any time appoint a person to be a Director,
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
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Advanced Braking Technology Ltd
CORPORATE GOVERNANCE STATEMENT
but the total number of Directors may not at any time exceed the maximum number specified in the Constitution of the Company
(currently nine) and any Director so appointed holds office only until the next following Annual General Meeting when they are
eligible for re-election.
Retirement and re-election of Directors
The Constitution of the Company requires one third of Directors, other than the Managing Director, to retire from office at each
Annual General Meeting. Directors who have been appointed by the Board are required to retire from office at the next Annual
General Meeting and are not taken into account in determining the number of Directors to retire at that Annual General Meeting.
Retiring Directors are eligible for re-election by Shareholders.
Independence of Directors
The Board of Directors are considered to be independent when they are independent of management and free from any business
or other relationship that could materially interfere with, or could reasonably be perceived to materially interfere with, the exercise
of their unfettered and independent judgment. In the context of director independence, “materiality” is considered from both the
Company and individual director perspective. The determination of materiality requires consideration of both quantitative and
qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the appropriate base
amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of
the appropriate base amount.
Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of
the relationship and the contractual or other arrangement governing it and other factors that point to the actual ability of the
director in question to shape the direction of the Company’s loyalty.
In accordance with the definition of the independence above, and the materiality threshold set, the following directors of Advanced
Braking Technology Ltd are considered to be independent:
Name
Mr Bruce Grey
Mr Adam Levine
Mr Mark Lindh
Position
Non-executive Director & Chairman
Non-executive Director
Non-executive Director
Independent professional advice
With the prior approval of the Chairperson, each Director has the right to seek independent legal and other professional advice at
the Company’s expense concerning any aspect of the Company’s operations or undertakings in order to fulfil their duties and
responsibilities as Directors.
Board performance review
The performance of all Directors is assessed through review by the Board as a whole. A Director’s attendance at and involvement
in Board meetings, his contribution and other matters identified by the Board or other Directors are taken into consideration.
Significant issues are actioned by the Board. Due to the Board’s assessment of the effectiveness of these processes, the Board has
not otherwise formalised measures of a Director’s performance.
The Company has not conducted a performance evaluation of the members of the Board during the reporting period, however
the Board conducts a review of the performance of the Company against budgeted targets on an ongoing basis.
DIRECTORS’ REMUNERATION
Details of the Company’s remuneration policies are included in the Remuneration Report section of the Directors’ Report.
Non-executive Directors will be remunerated by cash or share benefits alone and will not be provided with retirement benefits
(except in exceptional circumstances) other than statutory superannuation contributions. Executive Directors may be
remunerated by both fixed remuneration and equity performance based remuneration plus statutory superannuation
contributions but no termination payments will be agreed other than a reasonable period of notice of termination as
detailed in the executive’s employment contract.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
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Advanced Braking Technology Ltd
CORPORATE GOVERNANCE STATEMENT
SENIOR EXECUTIVES
The Board has delegated the operation and administration of the group to the Managing Director and the senior executive team.
Their performance is assessed formally by the Board on an annual basis both subjectively and by measuring performance against
Key Performance Indicators. Performance evaluations were completed in 2017 in accordance with the policy.
DIVERSITY POLICY
Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The Company is committed to diversity and
recognises the benefits arising from employee and Board diversity and the importance of benefiting from all available talent.
Accordingly, the Company has established a diversity policy which is provided to all staff with responsibility for recruitment.
This diversity policy outlines requirements for the Board to develop measurable objectives for achieving diversity, and annually
assess both the objectives and the progress in achieving those objectives. Accordingly, the Board has developed the following
objectives regarding gender diversity and aims to achieve these objectives as positions become vacant and appropriately qualified
candidates become available:
Women on the Board
Women in senior executive positions
Women employees in the Company
Actual
2017
Objectives
2018
No.
-
-
2
%
-
-
12%
No.
-
-
3
%
-
-
18%
MANAGING BUSINESS RISK
The Company maintains policies and practices designed to identify and manage significant business risks, including:
•
•
•
•
•
regular budgeting and financial reporting;
procedures and controls to manage financial exposures and operational risks;
the Company’s business plan;
corporate strategy guidelines and procedures to review and approve the Company’s strategic plans; and
insurance and risk management programmes which are reviewed by the Board.
The Board reviews these systems and the effectiveness of their implementation annually and considers the management of
risk at its meetings. The Company’s management has reported to the Board on the effectiveness of the Company’s management
of its material business risks. The Company’s risk profile is reviewed annually. The Board may consult with the Company’s external
auditors on external risk matters or other appropriately qualified external consultants on risk generally, as required.
The Board receives regular reports about the financial condition and operating results of the consolidated group. The
Managing Director / Chief Executive Officer and the Chief Financial Officer annually provide a formal statement to the Board that
in all material respects and to the best of their knowledge and belief:
•
•
the Company’s financial reports present a true and fair view of the Company’s financial condition and operational results
and are in accordance with relevant accounting standards; and
the Company’s risk management and internal control systems are sound, appropriate and operating efficiently and
effectively.
INTERNAL CONTROLS
Procedures have been established at the Board and executive management levels that are designed to safeguard the assets and
interests of the Company, and to ensure the integrity of reporting. These include accounting, financial reporting and internal
control policies and procedures. To achieve this, the non-executive Directors perform the following procedures:
•
•
•
ensure appropriate follow-up of significant audit findings and risk areas identified;
review the scope of the external audit to align it with Board requirements; and
conduct a detailed review of published accounts.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
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Advanced Braking Technology Ltd
CORPORATE GOVERNANCE STATEMENT
AUDIT COMMITTEE
The Audit Committee consists of three non-executive Directors. On 15 August 2017, the structure of the Audit Committee changed
to the following; Mr Adam Levine - Chairman, Mr Bruce Grey - Member, Mr David Slack – Member, Mr Mark Lindh - Member. The
Audit Committee has a formal charter. Meetings are held as required between the Audit Committee, the Company’s Chief
Executive Office, Chief Financial Officer and the auditors to discuss the Company’s ongoing activities and to discuss, where
appropriate, any proposed changes prior to their implementation and to seek advice in relation thereto.
The Board has no formal procedures for the selection, appointment or rotation of its external auditor but reviews this matter on
an ongoing basis and implements changes as required.
REMUNERATION COMMITTEE
In financial year 2013, the Board established a Remuneration Committee. This role was previously performed by the Board. The
Remuneration Committee has a formal charter. The role of the remuneration committee is to assist the Board in the general
application of the remuneration policy. In doing so, the remuneration committee is responsible for:
•
•
•
developing remuneration policies for Directors and Key Management Personnel, with the assistance, as necessary, of
independent external consultants;
reviewing Key Management Personnel remuneration packages annually and, based on these reviews, making
recommendations to the Board on remuneration levels for Key Management Personnel; and
assisting the Chair in reviewing KMP performance and reporting to the Board on Key Management Personnel
performance.
During the year ended 30 June 2017, the Remuneration Committee comprised all three non-executive Directors, Mr David Slack
(Chairperson), Mr Bruce Grey and My Adam Levine.
Their qualifications and their attendance at meetings of the committee are included in the Directors’ report.
On 15 August 2017, the structure of the Remuneration Committee changed to the following; Mr Mark Lindh - Chairman, Mr Bruce
Grey - Member, Mr David Slack – Member, Mr Adam Levine - Member.
There are no schemes for retirement benefits for Directors other than statutory superannuation arrangements for non-
executive/independent Directors.
NOMINATIONS COMMITTEE
In financial year 2013, the Board established a Nominations Committee. This role was previously performed by the Board. The
Nominations Committee has a formal charter.
The role of the Nominations Committee is to assist the Board in ensuring that the Board comprises directors with a range and mix
of attributes appropriate for achieving its objective. The committee assists the Board by:
•
•
•
•
reviewing the skills and expertise of directors and identifying potential deficiencies;
identifying suitable candidates for the Board, with the assistance of independent recruiting agencies;
overseeing Board and Director reviews; and
establishing succession planning arrangements.
During the year ended 30 June 2017, the Nominations Committee comprised two non-executive Directors, Mr David Slack
(Chairperson) and Mr Bruce Grey.
Their qualifications and their attendance at meetings of the committee are included in the Directors’ report.
The Nominations Committee did not meet during the year ended 30 June 2017, as all material issues were addressed at the
Directors’ Meetings.
ETHICAL STANDARDS
In pursuit of the highest ethical standards, the Company has adopted a Code of Conduct which establishes the standards of
behaviour required of Directors and employees in the conduct of the Company’s affairs. This Code is provided to all Directors and
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
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Advanced Braking Technology Ltd
CORPORATE GOVERNANCE STATEMENT
employees. The Board monitors implementation of this Code. Unethical behaviour is to be reported to the Company’s Managing
Director (or in his place the Chairperson of the Board) as soon as practicable.
The Code of Conduct is based on respect for the law, and acting accordingly, dealing with conflicts of interest appropriately, using
the consolidated entity’s assets responsibly and in the best interests of the Company, acting with integrity, being fair and honest in
dealings, treating other people with dignity and being responsible for actions and accountable for the consequences.
TRADING IN THE COMPANY’S SECURITIES BY DIRECTORS AND EMPLOYEES
The Board has adopted a policy in relation to dealings in the securities of the Company which applies to all Directors, employees,
contractors and consultants (“personnel”). Under the policy, personnel are prohibited from dealing in the Company’s securities
whilst in possession of price sensitive information. Directors and key management personnel are also prohibited from trading
except during specific trading windows and are required to advise the Company Secretary of their intention to do so before dealing
in the Securities. In exceptional circumstances, such as severe financial hardship, trading may be permitted in a prohibited trading
period, with the prior written consent of the Chairman of the Board or, if being sought by the Chairman of the Board, of the
Chairperson of the Audit Committee. An updated Securities Trading Policy was lodged with the ASX on 2 July 2014.
This policy is provided to all personnel. Compliance with it is reviewed on an ongoing basis in accordance with the Company’s risk
management systems.
CONTINUOUS DISCLOSURE
The Company has in place a continuous disclosure policy, a copy of which is provided to all Company officers and employees
who may from time to time be in the possession of undisclosed information that may be material to the price or value of the
Company’s securities.
The continuous disclosure policy aims to ensure timely compliance with the Company’s continuous disclosure obligations under
the Corporations Act 2001 (Cth) and ASX Listing Rules and ensure officers and employees of the Company understand these
obligations. The procedure adopted by the Company is essentially that any information which may need to be disclosed must be
brought to the attention of the Chairperson, who in consultation with the Board (where practicable) and any other appropriate
personnel, will consider the information and whether disclosure is required and prepare an appropriate announcement.
At least once in every 12 month period, the Board will review the Company’s compliance with this continuous disclosure policy and
update it from time to time, if necessary.
SHAREHOLDERS
The Board aims to ensure that Shareholders are kept informed of all major developments affecting the Company. Information is
communicated to Shareholders as follows:
•
•
•
•
•
as the Company is a disclosing entity, regular announcements are made to the Australian Stock Exchange in accordance
with the Company’s continuous disclosure policy, including quarterly cash flow reports, half-year audit reviewed accounts,
year-end audited accounts and an Annual Report;
the Board ensures the Annual Report includes relevant information about the operations of the Company during the year,
changes in the state of affairs and details of future developments;
any proposed major changes in the Company’s affairs are submitted to a vote of Shareholders, as required by the
Corporations Act 2001;
the Board encourages full participation of Shareholders at the Annual General Meeting to ensure a high level of
accountability and identification of the Company’s strategies and goals. All Shareholders who are unable to attend
these meetings are encouraged to communicate or ask questions by writing to the Company; and
the external auditor is requested to attend the annual general meetings to answer any questions concerning the audit and
the content of the auditor’s report.
The Board reviews this policy and compliance with it on an ongoing basis.
ASX BEST PRACTICE RECOMMENDATIONS
Pursuant to the ASX Listing Rules, the Company advises that based upon the information set out above, it does comply with the
Best Practice Recommendations, issued by the ASX Corporate Governance Council, with the exception of the following:
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Advanced Braking Technology Ltd
CORPORATE GOVERNANCE STATEMENT
Recommendation 2.4 The Nominations Committee should be structured so that it:
•
•
•
consists of a majority of independent directors
is chaired by an independent director
has at least three members
The Nominations Committee comprises only two Directors, one of whom is considered to be independent (see “Independence of
Directors” above). Consequently, the committee does not fully comply with the ASX’s Corporate Governance Principles and
Recommendations during the period.
Having regard to the number of members currently comprising the Company’s Board, the Board considers the size and composition
of the Nominations Committee to be appropriate. These arrangements will be reviewed periodically by the Board to ensure that
they continue to be appropriate to the Company’s circumstances.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
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Advanced Braking Technology Ltd
DIRECTORS’ REPORT
The Directors of Advanced Braking Technology Ltd submit herewith the annual financial report for the financial year ended 30 June
2017. In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:
Directors
The names and particulars of the Directors of the Company during or since the end of the financial year are:
Mr Bruce Grey Chairman and Non-Executive Director, Appointed 30 June 2013
Mr Grey was Managing Director of Advanced Manufacturing CRC Limited until April 2014. He is a Non-Executive Director of CAP
XX listed on the London Stock Exchange. He is also a Director of the Murdoch Children’s Research Institute and a Director of the
Victorian Clinical Genetics Services. He has been an Executive Director of two Australian public companies, was Chairman of a
German JV between Bishop Technology Group Limited and Mercedes-Benz Lenkungen GmbH for 10 years and was Chairman of
the Federal Government’s Advanced Manufacturing Action Agenda. Mr Grey also served as a member of the Federal
Government’s Future Manufacturing Industry Innovation Council until June 2012.
Mr Grey is a Fellow of the Australian Academy of Technological Sciences and Engineering. He was a member of the Expert Advisory
Panel for the Victorian Government’s Technology Voucher Program and served as Chairman until June 2014. In March 2012 he
was appointed a member of the Federal Government’s Clean Technology Investment Committee. He is a Member of the Australian
Institute of Company Directors.
Mr David Slack Non-Executive Director, Appointed 9 September 2009
Mr Slack is the founding Managing Director of Australian equity fund manager Karara Capital Pty Ltd. Karara was established in
2007 and now has around $3.7Billion in funds under management. Over the past 30 years, Mr Slack has made a significant
contribution to the Australian funds management industry. Notably, he was co-founder and joint managing director of Portfolio
Partners Limited, which was sold to Norwich Union in 1998. Prior to that, Mr Slack was a founding executive director of County Nat
West Investment Management, where he was head of Australian Equities. He was a non-executive director of the Victorian Funds
Management Corporation until 2007, holding positions of deputy Chairman and Chair of the Board Investment Committee. David
has a Bachelor of Economics with Honours and is a fellow of FINSIA. He is a member of the Australian Institute of Company
Directors.
Mr Adam Levine Non-Executive Director, Appointed 9 April, 2013
Mr Levine, a lawyer by profession, has over 20 years national and global experience in structuring and executing private equity
investments and corporate finance transactions both as legal advisor and a principal investor.
The founder and Executive Chairman of law firm R.B. Flinders, Mr Levine has grown the Melbourne based legal firm from a boutique
M&A practice established during the height of the 2008 GFC, into a pre-eminent private wealth law firm focussed on building
and protecting client wealth.
Mr Levine is also the Executive Chairman and founder of Rockwell Group Holdings, the head principal investment vehicle of the
Rockwell Group which undertakes investments into regulated financial services businesses. Mr Levine’s extensive private equity
experience and proactive investment practice have been the major contributory factor to the Rockwell Group’s success with a
portfolio IRR return in excess of most leading national and global private equity funds.
His current directorships include Rockwell Group Holdings Pty Ltd, Rockwell Funds Management Pty Ltd, Rockwell Bates Pty Ltd,
Rockwell Investments Pty Ltd, RLDO Pty Ltd, FMD Financial Pty Ltd, and a number of other private companies. Mr Levine is also the
founder (with his wife) and Chair of the Rockwell Foundation, a private ancillary fund, which focuses on supporting opportunities
for under privileged youth.
Mr Mark Lindh Non-Executive Director, Appointed 27 June, 2017
Mr Mark Lindh is a corporate advisor with in excess of 15 years’ experience in advising mining and resources companies with a
particular focus on the energy sector.
He is a founding director of Adelaide Equity Partners Limited, an investment and advisory company.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
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Advanced Braking Technology Ltd
DIRECTORS’ REPORT
Mr Graeme Sumner Executive Director and CEO, Resigned 27 June 2017, Appointed 28 January 2014
Mr. Sumner was appointed Executive Director and CEO on 28 January 2014. He is a highly experienced Managing Director
specialising in developing and expanding companies in a broad range of sectors and across a number of geographical regions.
Previous roles have included being the Chief Executive Officer and Managing Director of Service Stream Ltd, Chief Executive Officer
of Transfield Services (New Zealand) Limited and Managing Director of Siemens Ltd in New Zealand. He served in senior positions
at IBM, Telecom New Zealand, Contact Energy, New Zealand Post and its subsidiary companies, SkyRoad and Kiwimail. Mr Sumner
was also the Chairman of New Zealand Post’s joint venture airfreight company, AirPost Ltd. Mr. Sumner has a Master of Business
Administration and Bachelor of Commerce from Auckland University.
Directorships of other listed companies
Directorships of other listed companies held by Directors in the 3 years immediately before the end of the financial year, or at date
of retirement if earlier, are as follows:
Name
Mr Bruce Grey
Mr Mark Lindh
Company
CAP-XX Ltd (listed on the Alternative
Investment Market of the London Stock
Exchange)
Period of Directorship
2012 to date
Adelaide Equity Partners Ltd (not listed)
Bass Oil Limited (ASX code: BAS)
2006 to date
2014 to date
Mr Graeme Sumner
Kordia Ltd (NZ State-owned Enterprise)
2014 to date
Company Secretary
Neville Walker was appointed Company Secretary on 26 August 2014. Mr Walker is a Fellow Certified Practicing Accountant and a
Graduate member of the Australian Institute of Company Directors.
Principal activities
The principal activity of the Consolidated Group during the course of the year was the commercialisation, research, development
and manufacture of the SIBS®, Terra Dura® and associated braking systems.
Operating results
The results of the Consolidated Group for the year ended 30 June 2017 were a loss from continuing activities, after income tax, of
$565,000 (2016: loss of $1,758,000). Revenues from trading activities were $6,738,000 for the year ending 30 June 2017 compared
with $4,392,000 for the year ending 30 June 2016. Revenues from other activities were $948,000 for the year ended 30 June 2017
compared with $960,000 for the year ended 30 June 2016.
Dividends
There have been no dividends paid or declared by the Company in the last two years.
Summary of material transactions
Nil
Significant changes in the state of affairs
Other than as described elsewhere in this report there were no significant changes in the state of affairs of the Company during the
financial year.
Events subsequent to balance date
The only reportable event subsequent to balance date was the appointment of Mr Peter Hildebrandt to the position of Chief
Executive Officer, effective 28 August 2017.
Unissued Shares
At the date of this report there are 156,250,000 convertible notes on issue at a face value of $0.008. These may be converted to
shares at any time prior to the maturity date of 22 December 2018 at the request of the note holder, or will be converted into
15
Advanced Braking Technology Ltd
DIRECTORS’ REPORT
shares on the maturity date. They may also be redeemed at any time at ABT’s option. If the note holders convert the maximum
number of 156,250,000 convertible notes, then the same number of ordinary shares would be issued.
Future developments
The Economic Entity will continue to commercialise the SIBS® Brake Technology business in Australia and expand into overseas
markets, but it is expected that the major source of growth will be driven by the new Terra Dura® brake.
Directors’ interests
The relevant interest of each Director in the share capital of the Company, as notified by the Directors to the Australian Stock
Exchange in accordance with s205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Director
D Slack
A Levine
B Grey
M Lindh
Ordinary shares (as at 31/8/17)
291,471,478
5,833,334
21,750,000
19,000,000
Directors’ meetings
During the financial year there were 16 meetings of Directors, including committees of Directors but excluding circulating and
written resolutions.
The attendances of the Directors at these meetings were:
Directors’ Meetings
Audit Committee
Nomination
Committee
Remuneration
Committee
Number
eligible to
attend
11
11
11
11
Number
attended
11
11
11
11
Number
eligible to
attend
2
2
2
-
Number
attended
2
1
2
-
Number
eligible to
attend
-
-
-
-
Number
attended
-
-
-
-
Number
eligible to
attend
3
3
3
-
Number
attended
3
3
3
-
B Grey
D Slack
A Levine
G Sumner
REMUNERATION REPORT
This remuneration report for the year ended 30 June 2017 outlines the remuneration arrangements of the Company and the Group
in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This information has been audited
as required by section 308(3C) of the Act.
The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as those
persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the
Group, directly or indirectly, including any Director (whether executive or otherwise) of the Parent Company.
•
Individual key management personnel disclosures
Details of KMP of the Parent and Group are set out below.
Details of Key Management Personnel
Specified Directors
Name
B Grey
D Slack
A Levine
G Sumner
Position
Non-Executive Chairman
Non-Executive Director
Non-Executive Director
Executive Director & CEO
Appointment Date
30 June 2013
9 September 2009
9 April 2013
28 January 2014
Resignation Date
-
-
-
27 June 2017
16
Advanced Braking Technology Ltd
DIRECTORS’ REPORT
Specified Executives
Name
P Hildebrandt
M Johnston
D Robinson
N Walker
Position
Chief Executive Officer
General Manager, Engineering 1 July 2014
International Sales Director
CFO & Company Secretary
1 September 2014
26 August 2014
Appointment Date
28 August 2017
Resignation Date
-
-
30 June 2016
-
• Board Oversight of Remuneration
Remuneration Committee
During the year, the Remuneration Committee met three times to make recommendations to the Board on remuneration policy
and to recommend salary reviews and short and long-term incentives for the executive Director and specified executives.
Remuneration Policy
The remuneration policy of the Company is to pay executive Directors and specified executives at market rates which are sourced
from average wage and salary publications are subject to periodic reviews by external consultants and which may include a mix of
short and long-term incentives linked to performance and aligned with market practice. In addition, Directors and employees may
be issued shares and share options to encourage loyalty and to provide an incentive through the sharing of wealth created through
equity growth which is linked to Company performance. The Remuneration Committee members believe the remuneration policy
to be appropriate and effective and tailored to increase congruence between Shareholders and Directors and executives.
• Non-executive Director remuneration arrangements
Remuneration policy
The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors
of the highest calibre, whilst incurring a cost that is acceptable to Shareholders.
The amount of aggregate remuneration sought to be approved by Shareholders and the fee structure is reviewed against fees paid
to non-executive directors of comparable companies. The Company’s Constitution and the ASX listing rules specify that the non-
executive Directors’ fee pool shall be determined from time to time by a general meeting. The latest determination was at the
2005 Annual General Meeting (AGM) held on 1 November 2005 when Shareholders approved an aggregate fee pool of $300,000
per year.
The Board will not seek any increase for the non-executive Directors’ pool at the 2017 AGM.
Structure
The remuneration of non-executive Directors consists of directors’ fees. There are no schemes for retirement benefits for non-
executive Directors other than statutory superannuation and non-executive Directors do not participate in any incentive programs.
Other than the Chairman, each non-executive Director received a base fee of $55,000 per annum plus the superannuation
guarantee contribution. The Chairman received a base fee of $85,000 plus the superannuation guarantee contribution. Effective
1 August 2017, David Slack agreed to remain as a Non-Executive Director until later in 2017, whilst ABT works through the current
transition. He has agreed not to be paid fees from this date.
•
Executive remuneration arrangements
Remuneration level and mix
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities
within the Group and aligned with market practice. Advanced Braking Technology Ltd undertakes an annual remuneration review
to determine the total remuneration positioning against the market.
17
Advanced Braking Technology Ltd
DIRECTORS’ REPORT
• Remuneration of Directors and Executives
Executive Contracts
Mr Peter Hildebrandt, Mr Martin Johnston and Mr Neville Walker are employed through employment contracts. The
terms of the Employment Contract with Mr Hildebrandt, require both parties to provide four weeks’ notice to terminate
the contract. The terms of the Employment Contracts with Mr Johnston and Mr Walker require both parties to provide
three months’ notice to terminate the contract.
Equity holdings and transactions
The movement during the reporting period in the number of ordinary shares of Advanced Braking Technology Ltd held,
directly, indirectly or beneficially, by each specified Director, including their personally-related entities, is as follows:
Specified Directors
B Grey
D Slack
A Levine
M Lindh
G Sumner
Total
Structure
Movement during
year
Held at date of
resignation
Held at 30 June
2017
Held at 1 July 2016
or at date of
appointment
8,250,000
271,471,478
5,833,334
11,750,000
20,000,000
-
-
19,000,000
8,287,000
293,841,812
-
50,750,000
n/a
n/a
n/a
n/a
8,287,000
8,287,000
20,000,000
291,471,478
5,833,334
-
8,287,000
325,591,812
In the 2017 financial year, the executive remuneration framework consisted of the following components:
-
-
Fixed remuneration; and
Variable remuneration
The table below illustrates the structure of Advanced Braking Technology Ltd.’s executive remuneration arrangements:
Remuneration
component
Fixed
remuneration
Short-term
incentive
component
(STI)
Payment Vehicle
Purpose
Link to performance
by
total
Represented
employment cost (TEC).
Comprises base salary, plus
superannuation
contributions.
Paid in cash or share based
incentives for KMPs.
During the FY15 year a share
based scheme was put in
place for all KMP executives,
commencing 1
January
2015.
Employee share grant of up
shares.
to
(excluding
non-executive
directors).
$1,000
in
Set with reference to role,
market and experience.
Based on annual appraisal and
reference to market rates.
for
Rewards executives
their
to
contribution
achievement of Group and
business unit outcomes.
Linked to specified key performance
indictors including group performance
such as sales revenue, profit targets,
and cash performance against budget
and individual targets such product
commercialisation.
At judgement and discretion of the
Board of Directors.
18
Advanced Braking Technology Ltd
DIRECTORS’ REPORT
Rewards executives for
their
to
achievement of Group.
contribution
to Total
Linked
Shareholder
Return, three-year sales budgets
and profit targets.
At judgement and discretion of the
Board of Directors.
Long-term
incentive
component (LTI)
incentives
in cash or share
for
Paid
based
KMPs.
During the FY16 year, a
share based scheme was
put
in place for KMP
executives, commencing
1 July 2015.
The CEO’s LTI was aligned
with the other KMP’s
during FY17.
• Details of emoluments
The details of the nature and amount of emoluments of each Director and Specified Executive (Key Management Personnel) of the
Company are:
Directors
Year
Primary
Salary & Fees
$000’s
STI
Shares Bonus
$000’s
Post-Employment
Super
$000’s
85
85
55
55
55
55
-
-
195
195
-
-
-
-
-
-
-
-
-
-
8
8
5
5
5
5
-
-
18
18
Total
$000’s
93
93
60
60
60
60
-
-
213
213
Primary
STI
STI
LTI
Salary &
Fees
$000’s
284
365
195
186
204
201
-
159
683
911
Sales
Commission
$000’s
-
-
-
-
-
-
-
57
-
57
Shares
Bonus
$000’s
-
50
-
32
-
23
-
32
-
137
Bonus
$000’s
-
-
-
-
-
-
-
-
-
-
Equity
Total
Post
Employ-
ment
Super
Shares
$000’s
19
19
35
33
19
19
-
19
73
90
$000’s
-
-
-
-
-
-
-
-
-
-
$000’s
303
434
230
251
223
243
-
267
756
1,195
B Grey
D Slack
A Levine
M Lindh
Total
Total
Executives
G Sumner
N Walker
M Johnston
D Robinson
Total
Total
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Year
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Bonuses to Directors and Executives are recognised above in the year in which they are paid. STI’s relating to the period 1
January to 30 June 2015 of $137,145 were accrued in the in financial year 2015 and paid in financial year 2016, as disclosed in
the above tables. These STI’s were paid in the form of performance rights to ordinary shares in 2016. No STI’s for the CEO and
KMP’s were awarded in 2016. No LTI for the CEO was accrued in 2016 for the CEO, as it was considered unlikely to be payable.
Sales commissions were earned in 2016.
19
Advanced Braking Technology Ltd
STI’s totalling $100,407 (excluding on-costs) were accrued in 2017.
DIRECTORS’ REPORT
LTI’s of $9,321 (excluding on-costs) were accrued in 2017, based on probabilities of achievement. No LTI’s were accrued for the
CEO as they were not timed to vest until October 2018.
Commissions for the final quarter of 2015 was paid in first quarter of 2016. No KMP’s were paid sales commissions in 2017.
•
Securities Received that are not Performance Related
No members of key management personnel are entitled to receive securities which are not performance-based as part of their
remuneration package, other than up to $1,000 of shares under an employee share grant (ESG shares).
No shares under an employee share grant were issued in 2016 or 2017.
•
Cash Bonuses, Performance-related Bonuses and Share-based Payments
Details of STI’s and LTI’s are as follows;
•
•
•
•
•
STI’s 2015 - Shares issued based on entitlements earned.
STI’s 2016 – Shares to the value of $137,145 issued.
LTI’s 2016 - Outcome accrued $5,913 and will be known and finalised in October 2018.
STI’s 2017 - Outcome accrued $100,407 and will be finalised in October 2017.
LTI’s 2017 - Outcome accrued $3,408 and will be known and finalised in October 2019.
The STI’s and LTI’s are currently payable in performance rights to ordinary shares, but may revert to cash in future, subject to Board
approval.
The value of performance rights to be issued during the 2016 financial year, under the 2015 STI scheme was $137,145, which was
fully accrued in the 2015 year and was issued into the Advanced Braking Technology Limited Rights Share Trust managed by
Smartequity EIS Pty Ltd. The trust was established on 15 April 2015, with a valuation of $321,493.50, based on the Black Scholes
valuation methodology. Details of the valuation break-down as at 30 June 2017 are included below;
Held in Trust 16,480,162 @ $0.006
STIs & LTIs Open
Total
$98,881
$91,847
$190,728
Environmental regulation
The Consolidated Entity is not subject to any particular and significant environmental regulation under a law of the Commonwealth
or of a State or Territory.
Indemnification and Insurance of Directors, Officers and Auditor
During the course of the year the Company has paid $13,252 in premiums for Directors and Officers liability insurance for costs and
expenses incurred by them in defending legal proceedings arising out of their conduct whilst acting in the capacity of Director or
Officer of the Company other than conduct involving wilful breach of duty in relation to the Company. The Company has not
during or since the end of the financial year, in respect of an auditor of the Consolidated Group, paid a premium to indemnify an
auditor against a liability incurred as an auditor, including costs and expenses in successfully defending legal proceedings.
Proceedings on behalf of the Company
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which
the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
20
Advanced Braking Technology Ltd
DIRECTORS’ REPORT
Auditor’s Independence Declaration
The Auditor’s independence declaration is included after this Directors’ Report.
Non-Audit Services
The Directors are satisfied that the provision of non-audit services during the year by the auditor is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001. Details of the amounts paid to the auditor for audit
and non-audit services provided in respect of the year are set out below:
AUDITOR’S REMUNERATION
Remuneration of the auditor of the Consolidated Group for:
Auditing the financial statements
Other services
CONSOLIDATED GROUP
2016
$’000
2017
$’000
49
8
57
62
11
73
Rounding of Amounts
The Company is an entity to which ASIC Class Order 98/100 applies and accordingly, amounts in the financial statements and
Directors’ report have been rounded to the nearest thousand dollars.
Signed in accordance with a resolution of the Board of Directors.
Peter Hildebrandt
Chief Executive Officer
20 September 2017
21
Advanced Braking Technology Ltd
AUDITOR’S INDEPENDENCE DECLARATION UNDER
S307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF
ADVANCED BRAKING TECHNOLOGY LIMITED & CONTROLLED ENTITIES
Level 15, Exchange Tower,
2 The Esplanade, Perth, WA 6000
PO Box 5785, St Georges Terrace,
WA 6831
T +61 (0)8 9225 5355
F +61 (0)8 9225 6181
www.moorestephens.com.au
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2017 there have been
no contraventions of:
i.
the auditor independence requirements as set out in the Corporations Act 2001 in relation to the
audit; and
ii.
any applicable code of professional conduct in relation to the audit.
Neil Pace
Partner
Moore Stephens
Chartered Accountants
Signed at Perth this 20th day of September 2017
Liability limited by a scheme approved under Professional Standards Legislation. Moore Stephens - ABN 16 874 357 907. An independent member of Moore Stephens
International Limited - members in principal cities throughout the world. The Perth Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
22
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2013CONSOLIDATED GROUP
2016
$'000
4,392
(2,392)
2,000
2017
$'000
6,738
(3,932)
2,806
NOTES
3
Revenues from trading activities
Cost of sales
Gross Profit
Revenues from other activities
Expenses
Amortisation of Intellectual Property
Bad and doubtful debts
Computer related expenses
Consulting and contract labour expenses
Consumables and minor equipment
Depreciation expense
Employee expenses
Finance expenses
Insurance
Legal fees
Marketing and advertising expenses
Patents
Property expenses
Telephone and other communication
Travel and accommodation
Other expenses
Total expenses
Loss from continuing operations
Significant expenses
Loss before income tax
Income tax
Loss after income tax
2
3
3
3
3
4
7
948
960
(132)
-
(47)
(272)
(170)
(168)
(2,391)
(154)
(138)
(24)
(63)
(54)
(320)
(29)
(148)
(209)
(4,319)
(565)
-
(565)
-
(565)
(199)
(25)
(44)
(165)
(68)
(124)
(2,470)
(340)
(158)
(20)
(12)
(50)
(289)
(33)
(302)
(419)
(4,718)
(1,758)
-
(1,758)
-
(1,758)
-
-
(565)
(1,758)
Cents
(0.03)
Cents
(0.10)
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Foreign exchange translation
Total comprehensive loss for the period
Basic profit / (loss) per share (cents)
A diluted earnings per share has not been shown for either 2017 or 2016, as it would dilute the actual loss per share attributable
to existing Shareholders.
Notes to the financial statements are included on pages 27 to 56.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
23
Advanced Braking Technology Ltd
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
CONSOLIDATED STATEMENT OF FINANCIAL POSITI3CONSOLIDATED GROUP
NOTES
2017
$'000
CURRENT ASSETS
Cash and Cash equivalents
Trade and other Receivables
Inventories
Other current assets
Total current assets
NON-CURRENT ASSETS
Trade and other Receivables
Property, plant and equipment
Intangibles
Total non-current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other Payables
Interest bearing liabilities
Provisions
Total current liabilities
NON-CURRENT LIABILITIES
Interest-bearing liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued Capital
Accumulated losses
TOTAL EQUITY
Notes to the financial statements are included on pages 27 to 56.
8
9
10
11
9
13
14
15
16
17
16
17
18
19
2016
$'000
887
1,294
904
846
3,931
-
291
995
1,286
1,733
2,183
1,019
974
5,909
-
462
863
1,325
7,234
5,217
1,741
27
233
2,001
1,344
31
1,375
3,376
3,858
1,118
1,940
216
3,274
13
20
33
3,307
1,910
52,655
(48,797)
3,858
50,142
(48,232)
1,910
24
Advanced Braking Technology Ltd
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2017
FOR THE YEARDED 30 JUNE 2013
Net cash flows from operating activities
Receipts from customers
Payments to suppliers, consultants and employees
Borrowing costs
Interest received
Other – Grants and R&D tax incentive
NOTES
CONSOLIDATED GROUP
2017
$'000
6,396
(7,902)
(152)
19
832
2016
$'000
4,593
(7,364)
(270)
14
776
Net cash provided by / (used in) operating activities
22
(807)
(2,251)
Cash flows from investing activities
Proceeds from disposal of property, plant
and equipment
Purchase of property, plant and equipment
Net cash (used in) investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issue of shares
Cost of issuing shares
Net cash provided by financing activities
98
(363)
(265)
1,250
(1,845)
2,702
(189)
1,918
49
(163)
(114)
-
-
1,881
(138)
1,743
Net increase / (decrease) in cash and cash equivalents held
846
(622)
Cash and Cash equivalents at the beginning of the financial year
887
1,509
Cash and Cash equivalents at the end of the financial year
8
1,733
887
Notes to the financial statements are included on pages 27 to 56.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
25
Advanced Braking Technology Ltd
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
Attributable to equity holders of the parent
Issued
Capital
Accumulated
Losses
Other
Reserves
Total
$'000
$'000
$'000
$'000
CONSOLIDATED GROUP
At 1 July 2016
Loss for the year
Total comprehensive income / (loss) for the year
Transaction costs relating to share issues
Issue of ordinary shares
Total transactions with owners
50,142
(48,232)
-
-
(189)
2,702
2,513
(565)
(565)
-
-
-
At 30 June 2017
52,655
(48,797)
CONSOLIDATED GROUP
At 1 July 2015
Loss for the year
Total comprehensive income / (loss) for the year
Transaction costs relating to share issues
Issue of ordinary shares
Total transactions with owners
47,812
(46,474)
-
-
(135)
2,465
2,330
(1,758)
(1,758)
-
-
-
At 30 June 2016
50,142
(48,232)
Notes to the financial statements are included on pages 27 to 56.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,910
(565)
(565)
(189)
2,702
2,513
3,858
1,338
(1,758)
(1,758)
(135)
2,465
2,330
1,910
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
26
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
These general purpose financial statements have been prepared in accordance with the Corporations Act 2001, Australian
Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting
Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting
purposes under Australian Accounting Standards. The financial report is presented in Australian dollars. Material accounting
policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless
stated otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical
costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities.
Principles of Consolidation
(a)
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Advanced Braking
Technology Ltd) and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is
exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. A list of the subsidiaries is provided in Note 12.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date
on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases.
Intercompany transactions, balances and unrealised gains or losses on transactions between group entities are fully eliminated on
consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity
of the accounting policies adopted by the Group.
Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non-controlling interests”. The
Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a
proportionate share of the subsidiary’s net assets on liquidation at either fair value or at the non-controlling interests’ proportionate
share of the subsidiary’s net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit
or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity
section of the statement of financial position and statement of comprehensive income.
Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses.
A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or
businesses under common control. The business combination will be accounted for from the date that control is attained, whereby
the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to
certain limited exemptions).
When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent
consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not
remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability
is remeasured each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value
can be identified as existing at acquisition date.
All transaction costs incurred in relation to the business combination are expensed as incurred.
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
27
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Foreign Currency Transactions and Balances
(b)
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in
which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s
functional and presentation currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair
value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity
as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to
the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is
recognised in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s presentation
currency, are translated as follows:
-
-
-
assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
income and expenses are translated at average exchange rates for the period; and
Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are
recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial
position. These differences are recognised in profit or loss in the period in which the operation is disposed.
Cash and Cash Equivalents
(c)
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid
investments, net of any bank overdrafts. Bank overdrafts are reported within short-term borrowings in current liabilities in the
statement of financial position.
Goods and Services Tax (GST)
(d)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not
recoverable from the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable
from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or
payments to suppliers.
Impairment of Assets
(e)
At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The
assessment will include the consideration of external and internal sources of information including dividends received from
subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an
impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair
value less costs to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable
amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another
Standard (e.g. in accordance with the revaluation model in AASB 116). Any impairment loss of a revalued asset is treated as a
revaluation decrease in accordance with that other Standard.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount
of the cash-generating unit to which the asset belongs.
28
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Income Tax
(f)
The income tax expense / (revenue) for the year comprises current income tax expense / (income) and deferred tax expense /
(income).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current tax liabilities / (assets) are
measured at the amounts expected to be paid to / (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well
unused tax losses.
Current and deferred income tax expense / (income) is charged or credited outside profit or loss when the tax relates to items that
are recognised outside profit or loss.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, where
there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised
or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the
carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable
that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax
assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement
or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are
offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which
significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
(g)
Financial Instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that the Company commits itself to either the purchase or sale of the
asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair
value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately.
Classification and subsequent measurement
Finance instruments are subsequently measured at fair value amortised cost using the effective interest rate method, or cost.
Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal
repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial
amount and the maturity amount calculated using the effective interest method.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the
fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing
models.
29
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to
the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or
discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to
the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an
adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements
of Accounting Standards specifically applicable to financial instruments.
Financial assets at fair value through profit or loss
i)
Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose of short-term profit
taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to
enable performance evaluation where a Group of financial assets is managed by key management personnel on a fair value basis
in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value
with changes in carrying value being included in profit or loss.
Loans and receivables
ii)
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active
market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, where they are expected to mature within 12 months after the end of the
reporting period.
iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments,
and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost.
Held-to-maturity investments are included in current assets where they are expected to mature within 12 months after the end of
the reporting period. All other investments are classified as non-current assets.
iv) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories
of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of
other entities where there is neither a fixed maturity nor fixed or determinable payments.
They are subsequently measured at fair value with changes in such fair value (ie gains or losses) recognised in other comprehensive
income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the
cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or
loss.
Available-for-sale financial assets are included in current assets where they are expected to be sold within 12 months after the end
of the reporting period. All other financial assets are classified as non-current assets.
Financial liabilities
v)
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.
Derivative Instruments
The Group designates certain derivatives as either:
i)
ii)
At the inception of the transaction the relationship between hedging instruments and hedged items, as well as the Group’s risk
management objective and strategy for undertaking various hedge transactions, is documented.
hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge); or
hedges of highly probable forecast transactions (cash flow hedges).
Assessments, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions
have been and will continue to be highly effective in offsetting changes in fair values or cash flows of hedged items, are also
documented.
30
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
i)
Fair value hedge
Changes in the fair value of derivatives that are designated and qualified as fair value hedges are recognised in profit or loss
together with any changes in the fair value of hedged assets or liabilities that are attributable to the hedged risk.
Cash flow hedge
ii)
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is deferred to a
hedge reserve in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.
Amounts accumulated in the hedge reserve in equity are transferred to profit or loss in the periods when the hedged item will
affect profit or loss.
Impairment
At the end of each reporting period, the Group assesses whether there is objective evidence that a financial instrument has been
impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to
determine whether impairment has arisen. Impairment losses are recognised in profit or loss. Also, any cumulative decline in fair
value previously recognised in other comprehensive income is reclassified to profit or loss at this point.
Financial guarantees
Where material, financial guarantees issued that require the issuer to make specified payments to reimburse the holder for a loss
it incurs because a specified debtor fails to make payment when due are recognised as a financial liability at fair value on initial
recognition.
The guarantee is subsequently measured at the higher of the best estimate of the obligation and the amount initially recognised
less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entity gives guarantees in
exchange for a fee, revenue is recognised under AASB 118.
The fair value of financial guarantee contracts has been assessed using a probability-weighted discounted cash flow approach. The
probability has been based on:
-
-
-
the likelihood of the guaranteed party defaulting in a year period;
the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and
the maximum loss exposed if the guaranteed party were to default.
De-recognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expire or the asset is transferred to another
party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset.
Financial liabilities are derecognised where the related obligations are discharged, cancelled or expired. The difference between
the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid,
including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.
Provisions
(h)
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past events, for which it is probable
that an outflow of economic benefits will result and that outflow can be reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
Earnings per share
(i)
Basic earnings per share (“EPS”) is calculated by dividing the net profit or loss attributable to members of the parent entity for the
reporting period, after excluding any costs of servicing equity (other than ordinary shares and converting preference shares
classified as ordinary shares for EPS calculation purposes), by the weighted average number of ordinary shares of the Company,
adjusted for any bonus issue.
31
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs associated with dilutive
potential ordinary shares and the effect on revenues and expenses of conversion to ordinary shares associated with dilutive
potential ordinary shares, by the weighted average number of ordinary shares and dilutive potential ordinary shares adjusted for
any bonus issue.
Revenue and Other Income
(j)
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and
volume rebates allowed. When the inflow of consideration is deferred, it is treated as the provision of financing and is discounted
at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially
recognised and the amount ultimately received is interest revenue.
Revenue from the sale of goods is recognised when the consolidated entity has transferred to the buyer the significant risks and
rewards of ownership of the goods.
Interest revenue is recognised using the effective interest rate method.
Dividend revenue is recognised when the right to receive a dividend has been established.
Revenue from the rendering of services is recognised upon the delivery of the service to the customer.
Government Grants
(k)
Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant
conditions will be met. Grants relating to expense items are recognised as income over the periods necessary to match the grant
to the costs they are compensating. Grants relating to assets are credited to deferred income at fair value and are credited to
income over the expected useful life of the asset.
Where it is expected that a grant will be repaid if certain conditions are met, the liability to repay the grant is recognised as the
conditions are met and the liability crystallises.
R&D Tax incentives have been accounted for as government grants.
Intangibles Other than Goodwill
(l)
Technology Assets / Patents
Such assets are recognised at cost of acquisition. The cost of technology assets is amortised over the average life of the patents
granted for each technology asset on a straight-line basis. The average life of a patent varies between 10 and 20 years and
technology assets in the Intellectual Property purchased from Safe Effect Technologies International Ltd (SETI) was initially
amortised over 15 years. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period.
The amortisation rate was reassessed during the year, based on the extended patents, which currently run through to December
2030. The impact on the amount of amortisation compared to the annual amortisation expense in prior periods was a $67,000
reduction in amortisation expense in 2017 and $135,000 form 2018 onwards.
Research and development
Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised
only when technical feasibility studies identify that the project is expected to deliver future economic benefits and these benefits
can be measured reliably.
Development costs have a finite life and are amortised on a systematic basis based on the future economic benefits over the useful
life of the project.
32
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
An intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only
if, all of the following are demonstrated:
•
•
•
•
•
•
the technical feasibility of completing the intangible asset so that it will be available for use or sale;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
how the intangible asset will generate probable future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset; and
the ability to measure reliably the expenditure attributed to the intangible asset during its development.
Capitalised development costs will be amortised over their expected useful lives once commercial sales commence.
Inventories
(m)
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials,
direct labour and an appropriate portion of variable and fixed overheads. Such costs are assigned to inventory on hand by the
method most appropriate to each particular class of inventory, with the majority being valued on a weighted average basis. Net
realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing,
selling and distribution.
Leases
(n)
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal
ownership that is transferred to entities in the consolidated group, are classified as finance leases.
Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the fair value of the leased
property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are
allocated between the reduction of the lease liability and the lease interest expense for the period.
Finance leased assets are depreciated on a straight-line basis over their estimated useful lives.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as
expenses in the periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the lease term.
Property, Plant and Equipment
(o)
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated
depreciation and impairment losses.
Plant and equipment
Plant and equipment is measured on the cost basis and therefore carried at cost less accumulated depreciation and any
accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable
amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are
recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal
assessment of recoverable amount is made when impairment indicators are present.
The carrying amount of plant and equipment is reviewed periodically by Directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received
from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values
in determining recoverable amounts.
The cost of fixed assets constructed within the consolidated group includes the cost of materials and externally supplied services.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance are expensed to profit and loss during the financial period in which they are incurred.
33
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is
depreciated on a straight-line basis over the asset’s useful life to the consolidated group commencing from the time the asset is
held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the
estimated useful lives of the improvements.
The following estimated useful lives are used in the calculation of depreciation:
Class of Fixed Asset
Plant and equipment
Motor vehicles
Office equipment and furniture
Software
Leasehold improvements
2-5 years
3-15 years
3-5 years
3-5 years
5-10 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included
in profit and loss. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred
to retained earnings.
Employee Benefits
(p)
Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other
than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in
which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are
measured at the (undiscounted) amounts expected to be paid when the obligation is settled.
The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part of current
trade and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long
service leave entitlements are recognised as provisions in the statement of financial position.
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12
months after the end of the annual reporting period in which the employees render the related service. Other long-term employee
benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments
incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates
determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that
approximate the terms of the obligations. Any re-measurements for changes in assumptions of obligations for other long-term
employee benefits are recognised in profit or loss in the periods in which the changes occur.
The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial
position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of
the reporting period, in which case the obligations are presented as current provisions.
Equity-settled compensation
The Group operates an employee share/option ownership plan. Share-based payments to employees and Directors are measured
at the fair value of the instruments issued and amortised over the vesting periods. Share-based payments to non-employees are
measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is determined the fair
value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received. The
corresponding amount is recorded to the option reserve. The fair value of options is determined using the Black-Scholes pricing
model. The number of shares and options expected to vest is reviewed and adjusted at the end of each reporting period such that
the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity
instruments that eventually vest.
34
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Comparative Figures
(q)
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the
current financial year.
Where the Group has retrospectively applied an accounting policy, made a retrospective restatement of items in the financial
statements or reclassified items in its financial statements, an additional statement of financial position as at the beginning of the
earliest comparative period will be disclosed.
Rounding of Amounts
(r)
The parent entity has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts in the financial
statements and Directors’ report have been rounded off to the nearest $1,000.
Critical Accounting Estimates and Judgments
(s)
The Directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best
available current information. Estimates assume a reasonable expectation of future events and are based on current trends and
economic data, obtained both externally and within the Group.
Key Estimates – Impairment
The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to the
impairment of assets. Where an impairment trigger exists, the recoverable amount of the assets is determined. Fair value less
cost to sell and value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.
New Accounting Standards for Application in Future Periods
(t)
Accounting Standards issued by the AASB that are not yet mandatorily applicable to the Group, together with an
assessment of the potential impact of such pronouncements on the Group when adopted in future periods, are discussed
below:
–
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods
beginning on or after 1 July 2018).
The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below)
and includes revised requirements for the classification and measurement of financial instruments, revised
recognition and derecognition requirements for financial instruments and simplified requirements for hedge
accounting.
The key changes that may affect the Group on initial application include certain simplifications to the classification
of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected
credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that
are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge
accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-
financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting
requirements of the Standard, the application of such accounting would be largely prospective.
–
AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after
1 July 2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date of
AASB 15).
When effective, this Standard will replace the current accounting requirements applicable to revenue with a single,
principles-based model. Apart from a limited number of exceptions, including leases, the new revenue model in
AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the
same line of business to facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods
or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in
exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:
-
identify the contract(s) with a customer;
35
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
-
-
-
-
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.
The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each
prior period presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject
to certain practical expedients in AASB 15); or recognise the cumulative effect of retrospective application to
incomplete contracts on the date of initial application. There are also enhanced disclosure requirements regarding
revenue.
–
AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 July 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117:
Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the
requirement for leases to be classified as operating or finance leases.
The main changes introduced by the new Standard are as follows:
-
-
-
-
-
recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12
months of tenure and leases relating to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss
and unwinding of the liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the
lease liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and
instead account for all components as a lease; and
inclusion of additional disclosure requirements.
The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives
in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening
equity on the date of initial application.
–
AASB 2014-10: Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture (applicable to annual reporting periods beginning on or after 1 July
2018, as deferred by AASB 2015-10: Amendments to Australian Accounting Standards – Effective Date of
Amendments to AASB 10 and AASB 128).
This Standard amends AASB 10: Consolidated Financial Statements with regards to a parent losing control over
a subsidiary that is not a “business” as defined in AASB 3: Business Combinations to an associate or joint venture,
and requires that:
-
-
-
a gain or loss (including any amounts in other comprehensive income (OCI)) be recognised only to the
extent of the unrelated investor’s interest in that associate or joint venture;
the remaining gain or loss be eliminated against the carrying amount of the investment in that associate
or joint venture; and
any gain or loss from remeasuring the remaining investment in the former subsidiary at fair value also be
recognised only to the extent of the unrelated investor’s interest in the associate or joint venture. The
remaining gain or loss should be eliminated against the carrying amount of the remaining investment.
The application of AASB 2014-10 will result in a change in accounting policies for transactions of loss of control
over subsidiaries (involving an associate or joint venture) that are businesses per AASB 3 for which gains or
losses were previously recognised only to the extent of the unrelated investor’s interest.
36
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
The transitional provisions require that the Standard should be applied prospectively to sales or contributions of
subsidiaries to associates or joint ventures occurring on or after 1 July 2018. Although the directors anticipate
that the adoption of AASB 2014-10 may have an impact on the Group’s financial statements, it is impracticable
at this stage to provide a reasonable estimate of such impact.
The impact of adopting these standards is not expected to significantly impact future financial statements.
New, revised or amending Accounting Standards and Interpretations adopted
(u)
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Fair Value of Assets and Liabilities
(v)
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the
requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced)
transaction between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair
value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair
values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These
valuation techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market
with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous
market available to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the
asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its
highest and best use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements)
may be valued, where there is no observable market price in relation to the transfer of such financial instrument, by reference to
observable market information where such instruments are held as assets. Where this information is not available, other valuation
techniques are adopted and, where significant, are detailed in the respective note to the financial statements.
37
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2
REVENUES FROM OTHER ACTIVITIES
Other activities
- interest received
- net foreign exchange gain
- income from sale of fixed assets
- Export Market Development Grant
- R&D Tax Incentive
- Other income
Total revenue from other activities
3
PROFIT / (LOSS) BEFORE INCOME TAX
Profit / (Loss) before income tax has been determined after
deducting the following expenses:
Cost of sales
Finance expenses
Depreciation of non-current assets
- plant and equipment
- motor vehicle
- office equipment and furniture
- leasehold improvements
- software
Total depreciation
Bad and doubtful debts
- trade debtors
Total bad and doubtful debts
Operating leases
- property rental expense
- office equipment lease
Total operating leases
CONSOLIDATED GROUP
2016
$’000
2017
$’000
19
(5)
98
(8)
796
48
948
14
(2)
49
49
776
74
960
3,932
2,392
154
102
18
14
-
34
168
-
-
240
3
243
340
60
23
14
-
27
124
25
25
182
4
186
38
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
4:
INCOME TAX EXPENSE
CONSOLIDATED GROUP
2016
$’000
2017
$’000
a.
b.
c.
d.
The components of tax expense comprise:
Current tax
Deferred tax
Income tax
The prima facie tax benefit on loss from ordinary activities before income
tax is reconciled to the income tax as follows:
Prima facie tax benefit on loss from ordinary activities before income tax at
27.5% (2016: 30%)
Add tax effect of:
- Non-allowable items
- Revenue losses and other deferred tax balances not recognised
Less tax effect of:
- R&D tax incentive
- Recoupment of prior year tax losses not previously recognised
Income tax
Deferred tax recognised:
Deferred tax liabilities:
Grants receivable
Deferred tax assets:
Carry forward revenue losses
Net deferred tax
Unrecognised deferred tax assets:
Carry forward revenue losses
Carry forward capital losses
Capital raising costs
Provisions and accruals
Intangible assets
Other
-
-
-
(155)
571
59
475
(219)
(256)
-
-
-
-
5,206
83
84
107
69
2
5,551
-
-
-
(527)
535
225
233
(233)
-
-
(19)
19
-
5,810
91
71
145
95
1
6,213
The tax benefits of the above deferred tax assets will only be obtained if:
(a) the company derives future assessable income of a nature and of an amount sufficient to enable the benefits to be
utilised;
(b) the company continues to comply with the conditions for deductibility imposed by law; and
(c) no changes in income tax legislation adversely affect the company in utilising the benefits.
e.
Corporate Tax Rate:
The corporate tax rate for eligible companies will reduce from 30% to 25% by 30 June 2027, providing certain turnover
thresholds and other criteria are met. Deferred tax assets and liabilities are required to be measured at the tax rate that is
expected to apply in the future income year when the asset is realised or the liability is settled. The Directors have
determined that the deferred tax balances be measured at the tax rates stated.
39
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
5.
Key Management Personnel Compensation
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to
each member of the Group’s key management personnel (KMP) for the year ended 30 June 2017.
The totals of remuneration paid to KMP of the company and the Group during the year are as follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Total KMP compensation
Short-term employee benefits
2017
$000
878
91
-
-
2016
$000
1,163
108
-
137
969
1,408
These amounts include fees and benefits paid to the non-executive Chair and non-executive directors as well as all salary,
paid leave benefits, fringe benefits and cash bonuses awarded to executive directors and other KMP.
Post-employment benefits
These amounts are the superannuation contributions made during the year.
6.
AUDITOR’S REMUNERATION
Remuneration of the auditor of the Consolidated Group for:
Auditing the financial statements
Other services
7.
EARNINGS PER SHARE
Basic Earnings per share
Net (loss) ($’000’s)
Weighted average number of ordinary shares
during the year used in calculation of basic EPS (in ‘000’s)
Basic (loss) per share (cents)
CONSOLIDATED GROUP
2017
$’000
49
8
57
$’000
(565)
Number
(‘000’s)
2016
$’000
62
11
73
$’000
(1,758)
Number
(‘000’s)
2,162,610
1,668,815
cents
(0.03)
cents
(0.10)
A diluted earnings per share has not been shown for either 2017 or 2016 as it would dilute the actual loss per share
attributable to existing Shareholders.
40
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
8 CASH AND CASH EQUIVALENTS
Cash at bank
CONSOLIDATED GROUP
2017
$’000
1,733
2016
$’000
887
Reconciliation of cash
Cash at the end of the financial year as shown in the Cash Flows Statement is reconciled to items in the Balance Sheet as
follows:
Cash at bank
1,733
887
Advanced Braking Pty Ltd has an invoice finance facility agreement with NAB under which it may borrow up to $0.5m secured
against debtors. The amount which may be borrowed at any time varies depending on the debtor balance.
At 30 June 2017, the borrowing facility available was $500,000 (2016: $434,000) and the amount borrowed was $nil (2016:
$nil).
Borrowings are secured by a general security agreement over the assets of Advanced Braking Pty Ltd and are guaranteed by
Advanced Braking Technology Ltd.
9 TRADE AND OTHER RECEIVABLES
Current
Trade debtors
Less: provision for doubtful debts
Non-current
Other receivables
2,203
1,314
(20)
2,183
-
-
(20)
1,294
-
-
Receivables Ageing and Impairment losses
The aging of receivables for the consolidated group at the reporting date was:
Total Receivables
Gross Impairment
CONSOLIDATED GROUP
Not past due
Past due 0 – 30 days
Past due 31 – 60 days
Over 60 days #
2017
$’000
1,923
171
96
13
2,203
2016
$’000
874
25
177
238
1,314
2017
$’000
-
-
-
-
-
2016
$’000
-
-
-
-
-
41
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
The movement in the provision for impairment of trade receivables during the year is as follows:
Balance at 1 July
Impairment provision (recognised) / reversed during the year
Bad debts written off
Closing balance at 30 June
CONSOLIDATED GROUP
2017
$'000
(20)
-
-
(20)
2016
$'000
(30)
(25)
35
(20)
The provision account for receivables is used to record impairment losses unless the Company is satisfied that there is no
possibility of recovery of the amount, at which point it is directly written off against the amount owing.
10
INVENTORIES
Current
Finished goods
Components and WIP
Less: Provision for obsolescence
11
OTHER CURRENT ASSETS
Prepayments
Refundable deposits paid
Staff advances
Grants receivable
Accrued Income - R&D Tax incentive
-
1,044
(25)
1,019
178
-
-
-
796
974
28
976
(100)
904
6
-
-
64
776
846
12. CONTROLLED ENTITES
Advanced Braking Pty Ltd ACN 088 129 917 (Incorporated in WA)
Class and number of shares: ordinary
2017
Number
200,002
Parent Entity
2016
Number
200,002
On 28 May 2002, the parent entity acquired 100% of Advanced Braking Pty Ltd for a purchase consideration of $200,002.
The principal activity of the Company is brake research, design, engineering and commercialisation, and sales of brakes
and brake parts.
42
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED GROUP
13
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment at cost
Less: accumulated depreciation
Motor vehicles at cost
Less: accumulated depreciation
Leasehold Improvements at cost
Less: accumulated depreciation
Office equipment and furniture at cost
Less: accumulated depreciation
Software at cost
Less: accumulated depreciation
Total at net written down value
2017
$’000
373
(184)
189
145
(14)
131
45
-
45
104
(60)
44
114
(61)
53
462
Certain assets are secured in terms of Finance Lease Agreements as disclosed in Note 16(c).
2016
$’000
238
(81)
157
202
(174)
28
-
-
-
84
(49)
35
98
(27)
71
291
43
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Reconciliation
Movement in the carrying amounts for each class of property, plant and equipment between the beginning
and the end of the current financial year.
CONSOLIDATED GROUP
Plant &
Equipment
Motor
Vehicles
Office
Equipment &
Furniture
Leasehold
Improvements
Software
Total
2017
$'000
$'000
$'000
$'000
$'000
$'000
Balance at the beginning of year
Additions
Disposals
Written-off
Depreciation expense
157
134
-
-
(102)
28
145
(24)
-
(18)
Carrying amount at the end of year
189
131
35
23
-
-
(14)
44
-
45
-
-
-
71
16
-
-
291
363
(24)
-
(34)
(168)
45
53
462
$'000 $'000
$'000
$'000
$'000
$'000
2016
Balance at the beginning of year
Additions
Disposals
Written-off
Depreciation expense
90
144
-
(17)
(60)
85
(1)
(33)
-
(23)
Carrying amount at the end of year
157
28
14.
INTANGIBLES
Wet Brake technology assigned from
Safe Effect Technologies International Ltd
Less - Accumulated amortisation
Carrying amount at the end of year
24
25
-
-
(14)
35
-
-
-
-
-
-
80
18
-
-
279
186
(33)
(17)
(27)
(124)
71
291
CONSOLIDATED GROUP
2016
$’000
2017
$’000
2,984
(2,121)
863
2,984
(1,989)
995
Total carrying amount at the end of year
863
995
44
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Reconciliation
Movement in the carrying amounts for each class of intangible asset between the beginning and the end of the current
financial year:
CONSOLIDATED GROUP
2017
Balance at the beginning of year
Amortisation expense
Carrying amount at the end of year
2016
Balance at the beginning of year
Amortisation expense
Carrying amount at the end of year
Wet Brake
Technology
$'000
995
(132)
863
$'000
1,194
(199)
995
Total
$'000
995
(132)
863
$'000
1,194
(199)
995
Impairment Disclosure
No impairment assessment of intangibles was performed 2016, as there were no impairment triggers. An impairment
assessment of intangibles was performed in April 2017, triggered by the impending introduction of the new polymer Terra
Durra brake. This assessed confirmed the carrying amount of the SIBS Wet Brake IP and extended the amortisation period
to December 2030 to coincide with the expiry date of the existing patents.
15
TRADE AND OTHER PAYABLES
Current (unsecured)
Trade creditors
Accrued expenses
INTEREST BEARING LIABILITIES
16
(a) Current and non-current
Current (secured)
Lease agreements
Unexpired interest charges
Convertible Notes (i)
Interest due on Convertible note
Total
Non-current (secured)
Lease and Hire purchase agreements
Unexpired interest charges
Convertible Notes (ii)
Total
CONSOLIDATED GROUP
2016
$’000
2017
$’000
1,262
479
1,741
34
(7)
27
-
-
-
27
104
(10)
94
1,250
1,344
937
181
1,118
57
(2)
55
1,839
46
1,885
1,940
14
(1)
13
-
13
(i)
All $1,345,000 and $500,000 in convertible notes were redeemed on 15 August 2016 and 19 November
2016, respectively.
45
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(ii)
These Convertible Notes were issued on 22 December 2016 and may be converted to shares at any time
prior to the maturity date of 22 December 2018 for $1,250,000, at the request of the note holder, or will
be converted into shares on the maturity date. They may also be redeemed at any time at ABT’s option. If
the note holders convert, the maximum number of 156,250,000 convertible notes, then the same number
of ordinary shares would be issued.
(b)
Total of current and non-current
Lease, hire purchase, loans payable and convertible notes
Unexpired interest charges
(c)
The carrying amounts of non-current assets pledged as security are:
Motor vehicles
Office equipment
17
PROVISIONS
Current
Warranties
Employee entitlements
Total
Non-Current
Employee Entitlements
Other
Total
(b) Number of Employees
Number of employees at year-end
Australia
Overseas
Total
1,388
(17)
1,371
104
17
121
1,956
(3)
1,953
18
21
39
CONSOLIDATED GROUP
2016
$’000
2017
$’000
34
199
233
31
-
31
41
175
216
20
-
20
Number
Number
17
-
17
16
-
16
46
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
18
(a)
ISSUED CAPITAL
Issued Capital
The Parent Entity had issued 2,199,637,634 (2016: 1,813,529,007) fully paid ordinary shares as at the 30 June 2017.
Ordinary shares
Balance at beginning of the financial year
Exercise of options on 6 October 2015
1 for 4 rights issue 23 October 2015
Convertible notes converted to shares 5 November
2015
Shares issued to management under incentive scheme
5 November 2015
Shares issued shortfall of rights issue 11 November 2015
Shares issued shortfall of rights issue 20 November 2015
Convertible notes converted to shares 13 January 2016
Convertible notes converted to shares 19 April 2016
Exercise of options 25 May 2016
Placement 4 August 2016
Exercise of options 4 August 2016
Exercise of options 17 August 2016
2017
Number of
shares
$’000
2016
Number of
shares
$’000
1,813,529,007
50,142 1,476,074,530 47,812
1
1,049
47,257
149,852,532
15,306,123
150
22,857,512
108,773,805
10,000,003
15,306,123
15,306,122
5,000
134
761
70
150
150
-
385,950,008
67,569
91,050
2,700
1
1
Transaction costs relating to share issues
Balance at end of financial year
2,199,637,634
2,199,637,634
52,844
(189)
52,655
1,813,529,007 50,277
(135)
1,813,529,007 50,142
(b) Capital Management
Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the Shareholders
with adequate returns and ensure that the Group can fund its operations and continue as a going concern.
The Group’s debt and capital includes ordinary share capital and financial liabilities, supported by financial assets.
Advanced Braking Pty Ltd has a finance agreement with NAB under which it may borrow up to $0.5m secured against
debtors. The amount which may be drawn down at any time is dependent on the debtor balance - see note 9.
There are no externally imposed capital requirements.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of debt
levels, distributions to Shareholders, share issues and convertible note issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior
year. Management aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.
The gearing ratios for the years ended 30 June 2017 and 30 June 2016 are as follows:
The gearing ratio is calculated as net debt divided by total capital. Net debt is defined as interest bearing liabilities less
cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the statement of financial position plus net
debt.
(c) Gearing ratio
CONSOLIDATED GROUP
2016
35.8%
2017
(10.4%)
47
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
19 ACCUMULATED LOSSES
Accumulated losses at the beginning of the financial year
Net loss attributable to members of the parent entity
Accumulated losses at the end of the financial year
20
(a)
CONTRACT AND LEASING COMMITMENTS
Finance lease commitments
Payable
- not later than 1 year
- later than 1 year but not later than 5 years
Less future finance charges
Total hire purchase and finance lease liability
(b) Operating lease commitments
Non-cancellable operating lease contracted for but not capitalised in the financial statements
Payable
- not later than 1 year
- later than 1 year but not later than 5 years
98
345
443
21
SEGMENT REPORTING
CONSOLIDATED GROUP
2016
2017
(48,232)
(565)
(48,797)
(46,474)
(1,758)
(48,232)
34
104
138
(17)
121
57
14
71
(3)
68
213
231
444
The Consolidated Group’s principal activities are research and development, commercialisation and manufacture of
SIBS® and the new Terra Dura® braking systems, predominantly in Australia and via distribution arrangements to other
countries.
For management purposes, the Group is organised into one main operating segment. All of the Group’s activities are
interrelated and discrete financial information is reported to the Board (Chief Operating Decision Maker) as a single
segment. The financial results from this segment are equivalent to the financial statements of the group.
Revenue by geographical region
Revenue attributable to external customers is disclosed below based on the location of the external customer.
CONSOLIDATED
GROUP
Australia
Canada
Germany
Guatemala
Indonesia
Kazakhstan
Mongolia
Netherlands
New Guinea
New Zealand
2017
$’000
4,395
577
2
-
574
-
247
-
33
66
2016
$’000
2,857
161
2
7
12
20
-
2
55
22
48
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Poland
Singapore
South Africa
Turkey
USA
Total revenue from trading activities
Assets by geographical region
The location of segment assets by geographical location of the assets is disclosed below:
Australia
Other
Total assets
80
1
702
51
10
6,738
606
27
527
81
13
4,392
7,234
-
7,234
5,217
-
5,217
Major customers
The Group has a number of customers to whom it provides both products and services. The three most significant
customers are:
Significance
1st
2nd
3rd
2017
% of total revenue
from trading activities
17.2%
8.4%
7.6%
2016
% of total revenue from
trading activities
13.7%
11.2%
10.6%
CONSOLIDATED GROUP
2016
$’000
2017
$’000
22
(a)
CASH FLOW INFORMATION
Reconciliation of Cash Flow from operations with profit / (loss) after income tax
Profit / (Loss) from ordinary activities after income tax
(Profit) / loss on disposal of property, plant and equipment
Non-cash flows in loss from ordinary activities
Depreciation and impairment
Amortisation of IP
Changes in assets and liabilities
(Increase) / decrease in trade and other receivables
(Increase) / decrease in inventories
(Increase) / decrease in other current assets
Increase / (decrease) in trade and other payables
Increase / (decrease) in provisions
Cash inflows / (outflows) from operations
(565)
(74)
168
132
(890)
(115)
(128)
637
28
(807)
(1,758)
2
124
199
(162)
(192)
84
(574)
26
(2,251)
49
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(b)
Non-cash financing and investing activities
2017
During the year to 30 June 2017, nil ordinary shares were issued to Directors and Key Management Personnel.
2016
During the year to 30 June 2016, ordinary shares were issued to Directors and Key Management Personnel as
follows;
a) ordinary shares were issued to one Director, the CEO/Managing Director, who was issued with 8,287,000
shares, awarded under his 2015 STI.
b) ordinary shares were issued to the three Key Management Personnel, who were awarded 14,570,512
shares under their 2015 STI.
23
(a)
(b)
RELATED PARTY TRANSACTIONS
Intercompany transactions
Transactions between related parties are on normal commercial terms and conditions except for intercompany loans
which are provided at no interest and are treated by the Parent Entity as an investment in the subsidiary. Related
party transactions are eliminated on consolidation.
Directors and Key Management Personnel
During 2017, nil ordinary shares were issued to directors and key management personnel – see note 22 (b).
During 2016, ordinary shares were issued to one director and three key management personnel – see note 22 (b).
24
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Overview
The Company and its Subsidiaries (“Group”) have exposure to the risks below from financial instruments:
i) Market risk;
ii)
Liquidity risk;
iii) Credit risk.
The Directors have responsibility for the development and control of the risk management framework. The Audit
Committee, established by the Directors, is responsible for development and monitoring of risk management policies.
The Group’s principal financial instruments comprise cash, interest bearing deposits, lease and an invoice finance facility
(see note 8). The purpose of these financial instruments is to finance the growth of the Group and to provide working
capital for the Group’s operations.
The Group has various other financial instruments including trade debtors and trade creditors which arise directly out
of its operations and through the negotiation of trading terms with customers and suppliers. During the period under
review, the Group has not traded in financial instruments. However, it is Group policy to hedge foreign currency against
fluctuations where appropriate, which may result in exchange losses.
The main risks arising from the Group’s financial instruments are market risk, including interest rate risk and foreign
currency risk, liquidity risk and credit risk. The Directors review and agree policy for managing each of these risks and
they are summarised as follows:
(a)
Market Risk
Interest rate risk
The economic entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate
as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial
assets and financial liabilities, is as follows:
50
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
2017
Financial assets
Cash
Receivables - current
Accrued Income (note 11)
Government Grants
R&D Tax incentive
Total financial assets
Financial liabilities
Payables
Interest Payable
Finance lease liabilities
Convertible notes
Total financial liabilities
Average
Interest
Rate
%
Floating
Interest
Rate
$’000
Within 1
Year
1 to 5
Years
$’000
$’000
Non-
Interest
Bearing
$’000
1.0%
-
-
-
-
-
6.8%
9.0%
1,733
-
-
-
1,733
-
-
-
-
-
-
-
-
-
-
-
-
27
-
27
-
-
-
-
-
-
-
94
1,250
1,344
-
2,183
-
796
2,979
1,741
-
-
-
1,741
Total
$’000
1,733
2,183
-
796
4,712
1,741
-
121
1,250
3,112
Net Financial Assets / (Liabilities)
1,733
(27)
(1,344)
1,238
1,600
2016
Financial assets
Cash
Receivables - current
Accrued Income (note 11)
Government Grants
R&D Tax incentive
Total financial assets
Financial liabilities
Payables
Interest Payable
Finance lease liabilities
Convertible notes
Total financial liabilities
1.2%
-
-
-
-
-
8.5%
12.0%
887
-
-
-
887
-
-
-
-
-
-
-
-
-
-
-
-
55
1,839
1,894
-
-
-
-
-
-
-
13
-
13
-
1,294
64
776
2,134
1,118
46
-
-
887
1,294
64
776
3,021
1,118
46
68
1,839
1,164
3,071
Net Financial Assets / (Liabilities)
887
(1,894)
(13)
970
(50)
As at 30 June 2017 Advanced Braking Pty Ltd was entitled to interest on deposits at the National Australia Bank at rates
up to 2.10% per annum (2016: 2.05% per annum).
The sensitivity analysis below is based on the interest rate risk exposure in existence at the balance sheet date. The
1.0% (2016: 1.0%) interest rate sensitivity is based on reasonable possible changes, over a financial year, using an
observed range of historical Australian Reserve Bank rate movement over the last two years.
51
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Possible movements before tax:
+1.0% (2016: 1.0%) per annum
-1.0% (2016: -1.0%) per annum
Reconciliation of net financial assets to net assets
Net financial (liabilities)/assets as above
Non-financial assets and liabilities
-Inventories
-Property, plant & equipment
-Intangible Assets
-Other current assets-prepayments (note 11)
-Refundable deposits
-Staff advances
-Provisions - Current
-Provisions - Non-current
Net (liabilities)/assets as per the Balance Sheet
CONSOLIDATED GROUP
2016
2017
$’000
$’000
9
(9)
1,600
1,019
462
863
178
-
-
(233)
(31)
3,858
1
(1)
(50)
904
291
995
6
-
-
(216)
(20)
1,910
The Directors’ objective is to earn the highest rate of interest on deposits with minimum risk. The Directors’ policy
therefore is to place deposits with recognised banks which offer the highest variable and/or fixed rates. Similarly, loans
and asset finance contracts are shopped to find the lowest rates of interest expense.
Foreign Currency Risk
The Company currently has minimal foreign exchange exposure with regard to both the receivables and payables and
currently has no offshore assets.
At 30 June 2017, the Company does not have any forward foreign exchange contracts in place. As at 30 June 2017 the
Group had the following exposure to foreign currency:
Financial Asset
Cash and cash equivalents
Trade and other receivables
Financial Liabilities
Payables
Net Exposure
CONSOLIDATED GROUP
2016
2017
$’000
$’000
-
-
14
6
14
6
-
6
2
12
The following sensitivity analysis is based on the foreign currency risk exposure in existence at the balance sheet date.
The 7% (2016: 7%) sensitivity is based on reasonable possible changes, over a financial year, using an observed range
of actual historical rates in foreign exchange movements over the last two years.
In the year to 30 June 2017, if the Australian Dollar had moved, as illustrated in the table below, with all other variables
held constant, the results before tax relating to financial assets and would have been affected as shown below:
Possible movements before tax:
Pre Tax Profit – higher/(lower)
+7% (2016: +7%) per annum
-7% (2016: -7%) per annum
0
(0)
1
(1)
52
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
(b)
Liquidity Risk
The Group’s objective is to fund new product development and commercialisation through Shareholder equity,
convertible notes, government grants, R&D tax incentives, lease finance and bank funding where available.
The Group manages liquidity risk by maintaining adequate cash reserves through share issues, convertible note issues,
debtor finance, secured bank lending and asset finance. Future funding requirements are determined through the
monitoring of regular cash flow forecasts, which reflect management’s expectations in respect of future turnover,
development of new markets and products, capital investment and the settlement of financial assets and liabilities.
CONSOLIDATED GROUP
2016
$’000
2017
$’000
The following are the contractual maturities of financial liabilities, including estimated interest payments:
0 – 6 months
6 – 12 months
1 – 5 years
Payment made, 90 days post 15 August 2016 for Convertible Notes redeemed
by holders. See note 16(a).
Payment made, up to 90 days post 19 November 2016, for Convertible Note
redeemed by holder. See note 16(a).
12
12
97
121
-
-
121
48
8
12
68
1,345
500
1,913
The following table discloses maturity analysis of financial assets and liabilities based on management expectation:
CONSOLIDATED GROUP AS AT 30 JUNE 2017
Financial Assets
Cash and cash equivalents
Trade and other receivables
Accrued Income
R&D tax incentive
Total financial assets
Financial Liabilities
Payables
Hire purchase and finance lease liabilities
Convertible notes
Total financial liabilities
Net exposure
< 6 Mths
$'000
6 - 12 Mths
$'000
1 - 5 Years
$'000
1,733
2,183
796
4,712
1,741
12
-
1,753
2,959
-
-
-
-
-
12
-
12
-
-
-
-
-
97
1,250
1,347
(12)
(1,347)
Total
$'000
1,733
2,183
796
4,712
1,741
121
1,250
3,112
1,600
53
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
CONSOLIDATED GROUP AS AT 30 JUNE 2016
Financial Assets
Cash and cash equivalents
Trade and other receivables
Accrued Income
Government grants
R&D tax incentive
Total financial assets
Financial Liabilities
Payables
Hire purchase and finance lease liabilities
Convertible Note accrued interest
Convertible notes
Total financial liabilities
Net exposure
(c)
Credit risk
887
1,294
64
776
3,021
1,118
48
46
1,839
3,051
(30)
-
-
-
-
-
-
8
-
-
8
-
-
-
-
-
-
12
-
-
12
(8)
(12)
887
1,294
64
776
3,021
1,118
68
46
1,839
3,071
(50)
Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.
The credit risk on financial assets of the Consolidated Group which has been recognised on the Balance Sheet is the
carrying amount, net of any provision for doubtful debts. At year end the Consolidated Group’s exposure to credit risk
arises primarily from the mining industry.
The Consolidated Group is not materially exposed to any individual overseas country or individual customer.
The Company’s policy is to manage credit risk by ensuring that all customers who wish to trade on credit terms subject
themselves to credit worthiness checks, and to obtain agreement to a “retention of title” clause where possible. The
Directors believe that the Company’s exposure to bad debts is not significant and adequately covered by the
estimated bad and doubtful debt accrual of $20,000 as at 30 June 2017.
Other than the concentration of credit risk described, the economic entity does not have any significant risk exposure
to any counterparty or group of parties. The carrying amount of financial assets recorded in the financial statements,
net of any provision for losses, represents the economic entity’s maximum exposure to credit risk.
(d)
Net fair values
The financial assets and liabilities included in current asset and current liabilities in the Balance Sheet position are
carried at amounts that approximate net fair values or recoverable amount. Impairment assessments in financial
year 2017 resulted in the reduction of the provision for obsolete inventory to $25,000 (2016: $100,000).
Intangible assets as at 30 June 2017 only comprises the Wet Brake technology assigned from Safe Effect Technologies
International Ltd on 27 June 2006. The amortisation period was extended to December 2030 in 2017, being the current
life of patents which underpin the carrying value.
25
EVENTS SUBSEQUENT TO BALANCE DATE
Mr Peter Hildebrandt was appointed as ABT’s new Chief Executive Officer on 28 August 2017, following the resignation
of Mr Graeme Sumner on 4 July 2017.
26
CONTINGENT LIABILITIES
There are no contingent liabilities.
54
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
27
SHARE BASED PAYMENTS
No members of key management personnel are entitled to receive securities which are not performance-based as part
of their remuneration package.
28
PARENT INFORMATION
The following information has been extracted from the books and records of the parent company and has been
prepared in accordance with Accounting Standards.
STATEMENT OF FINANCIAL POSITION
ASSETS
Current assets
TOTAL ASSETS
LIABILITIES
Current Liabilities
TOTAL LIABILITIES
EQUITY
Issued Capital
Other reserves
Accumulated losses
TOTAL EQUITY
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
Total profit/(loss) after tax
Total Comprehensive Income/(Loss)
2017
$'000
2016
$'000
295
1
5,666
4,072
83
1,333
52,655
-
(48,332)
4,333
2017
$'000
1,962
1,962
50,142
-
(48,032)
2,110
2016
$'000
(290)
(290)
(676)
(676)
55
Advanced Braking Technology Ltd
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Guarantees
At 30 June 2017, Advanced Braking Technology Ltd had granted a guarantee and indemnity in relation to the obligations
of Advanced Braking Pty Ltd in favour of NAB in connection with an invoice finance facility which was established during
the 2013 financial year.
Advanced Braking Technology Ltd has provided guarantees to a number of suppliers of Advanced Braking Pty Ltd in
connection with the subsidiary negotiating finance under lease agreements and in relation to the Perth leased
premises. The Directors have also resolved that the Company will continue to provide financial support to its
subsidiaries for as long as it is required.
Contingent Liabilities
There are no contingent liabilities.
Contractual Commitments
As at 30 June 2017, Advanced Braking Technology Ltd had not entered into any contractual commitments for the
acquisition of property, plant and equipment (2016: Nil).
56
Advanced Braking Technology Ltd
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1. The financial statements and notes, as set out on pages 23 to 56, are in accordance with the Corporations Act 2001:
a) comply with Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes
compliance with International Financial Reporting Standards (IFRS); and
b) give a true and fair view of the financial position as at 30 June 2017 and of the performance for the year ended
on that date of the consolidated group.
2. The Chief Executive Officer and Chief Finance Officer have each given the declarations required by s295A of the Corporations
Act 2001.
3.
In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors and is signed by authority for and on behalf of
the Directors by:
Bruce Grey
Chairman
Melbourne, Victoria
20 September 2017
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
57
Advanced Braking Technology Ltd
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ADVANCED BRAKING TECHNOLOGY LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
Level 15, Exchange Tower,
2 The Esplanade, Perth, WA 6000
PO Box 5785, St Georges Terrace,
WA 6831
T +61 (0)8 9225 5355
F +61 (0)8 9225 6181
www.moorestephens.com.au
We have audited the financial report of Advanced Braking Technology Limited (the Company) and its
subsidiaries (the “Group”), which comprises the consolidated statement of financial position as at
30 June 2017, the consolidated statement of profit or loss and other comprehensive income, the consolidated
statement of changes in equity and the consolidated statement of cash flows for the year then ended, and
notes to the financial statements, including a summary of significant accounting policies, and the directors’
declaration.
In our opinion:
a) the accompanying financial report of the Group is in accordance with the Corporations Act 2001,
including:
i.
ii.
giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial
performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section
of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards
Board’s APES 110 Code of Ethics for Professional Accountants (the “Code”) that are relevant to our audit of
the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been given
to the directors of the Company, would be in the same terms if given to the directors as at the time of this
auditor’s report.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial report of the current year. These matters were addressed in the context of our audit of
the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
Liability limited by a scheme approved under Professional Standards Legislation. Moore Stephens - ABN 16 874 357 907. An independent member of Moore Stephens
International Limited - members in principal cities throughout the world. The Perth Moore Stephens firm is not a partner or agent of any other Moore Stephens firm.
58
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ADVANCED BRAKING TECHNOLOGY LIMITED (CONTINUED)
Key Audit Matters (continued)
Impairment of WET Brake Technology
Refer to Note 14 Intangibles
The carrying value of Advanced Braking’s WET Brake
Technology as at 30 June 2017 was $863,000 and
the related amortisation charge for the year ended
30 June 2017 was $132,000.
The carrying value and amortisation rate are
reviewed annually by management with reference
to current and forecast trading performance,
relevant technical factors and current market
values. This
involves a significant amount of
management judgement.
This is a key area of audit focus because the carrying
value is material and the value is subject to
significant management judgement and estimates.
Our audit procedures included, amongst others, the
following:
• Assessed the reasonableness of management’s
assertions and estimates regarding estimated
useful life of the asset.
• Discussed indicators of possible impairment with
management and the directors and, where such
indicators
assessed
identified,
were
management’s impairment testing.
• Challenged
the assumptions and
critical
judgements used by management by assessing
the reliability of past estimates and taking into
account current industry conditions and future
operating plans
(including budgets and
forecasts).
Going Concern Assessment
The financial statements are prepared on a
going concern basis in accordance with AASB
101 Presentation of Financial Statements and,
given historical trading losses and as the
directors’ assessment of the Group’s ability to
continue as a going concern can be highly
judgemental, we identified going concern as a
significant
audit
requiring
consideration.
special
risk
• Comparison of the market capitalisation of the
Company with the book value of its net assets.
• Testing of amortisation expense recorded and
ensured consistency with the accounting policy.
• Review of disclosure in the financial statements
to ensure appropriateness and adequacy.
Our audit procedures included, amongst others, the
following:
• An evaluation of the directors’ assessment of the
Group’s ability to continue as a going concern. In
particular we reviewed budgets and cashflow
forecasts
(including sensitivity analysis where
necessary) for at least the next 12 months and
reviewed and challenged the directors’ assumptions.
• Reviewed funding available from undrawn finance
facilities and other sources.
• An evaluation of the directors plans for future
operations and actions in relation to its going concern
assessment, taking into account any relevant events
subsequent to the year end, through discussion with
the directors and the audit committee.
• Review of disclosure in the financial statements to
ensure appropriate.
59
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ADVANCED BRAKING TECHNOLOGY LIMITED (CONTINUED)
Key Matters (continued)
Existence and Valuation of Inventories
Refer to Note 10 Inventories
The carrying value of inventory as at 30 June 2017
was $1,019,000.
finished
Inventory comprises
goods, components and work in progress.
Inventories are held in significant quantities and are
valued at the lower of cost and net realisable value
(NRV).
A provision for obsolete and slow moving inventory
is raised by management, the assessment of which
is subject to significant management judgement.
Obsolete and slow moving inventory could result in
an overstatement of
the carrying value of
inventories as the recorded cost may be higher than
the net realisable value.
We have therefore identified inventory existence
and valuation as a key audit matter.
inventories
Our procedures to test the existence and valuation
of
included, amongst others, the
following:
• Testing the relevant internal control procedures
relating to the existence and valuation of
inventory, including attendance at the physical
inventory count at year end
• Testing a sample of
items and
comparing our count results with those of the
Group's representative and investigating any
variances
inventory
• Performing test of details on historical costs,
including testing the mathematical accuracy of
the final inventory listing.
• Review of slow moving and “old” inventory lines
in order to ensure they have been appropriately
valued.
• Testing a sample of
to
subsequent sales to ensure that they were
recorded at the lower of cost and net realisable
value
inventory
items
• Reviewing gross margins
for any unusual
patterns compared to prior periods
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial
report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial report or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
60
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ADVANCED BRAKING TECHNOLOGY LIMITED (CONTINUED)
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with the Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this
financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or
error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, international omissions, misrepresentation, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause the Group to cease to continue as a going
concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the financial report. We are responsible
for the direction, supervision and performance of the Group audit. We remain solely responsible for
our audit opinion.
61
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ADVANCED BRAKING TECHNOLOGY LIMITED (CONTINUED)
Auditor’s Responsibilities for the Audit of the Financial Report (continued)
We communicate with the directors regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit matters.
We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about
the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
REPORT ON THE REMUNERATION REPORT
Opinion on the Remuneration Report
We have audited the Remuneration Report as included in the directors’ report for the year ended
30 June 2017.
In our opinion, the Remuneration Report of Advanced Braking Technology Limited, for the year ended
30 June 2017 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an
opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing
Standards.
NEIL PACE
PARTNER
MOORE STEPHENS
CHARTERED ACCOUNTANTS
Signed at Perth this 20th day of September 2017
S
62
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this report is set out below.
STOCK EXCHANGE INFORMATION
1.
Statement of issued capital at 31 August 2017.
(a)
Distribution of fully paid ordinary shares
Size of Holding
Number of
Shareholders
Shares Held
1
1,001
5,001
10,001
100,001
Total
(b)
(c)
-
-
-
-
and
1,000
5,000
10,000
100,000
Over
65
17
145
528
886
1,641
4,815
57,319
1,382,895
24,886,175
2,173,306,430
2,199,637,634
There are 674 Shareholders with less than a marketable parcel.
There are no restrictions on voting rights attached to the ordinary shares on issue. On a show of hands, every
member present in person shall have one vote and upon a poll, every member present in person or by proxy
shall have one vote for every share held.
2.
Substantial Shareholders
The Company has the following substantial Shareholder at 31 August 2017:
- Mr David Slack
291,471,478 shares
3.
Shareholders
The twenty largest Shareholders hold 42.4% of the total issued ordinary shares in the Company as at 31 August 2017.
4.
Share Options
There are currently no share options on issue.
5.
Convertible Notes
there are 156,250,000 convertible notes on issue at a face value of $0.008. These may be converted to shares at any time
prior to the maturity date of 22 December 2018 at the request of the note holder, or will be converted into shares on the
maturity date.
Unlisted convertible notes with a face value of $0.008 per note, bearing interest at 9.0% per annum, convertible into
shares at $0.008 per share up to the maturity date of 22 December 2018.
Number of Convertible Notes
Number of Holders
156,250,000
5
On-market buy-back.
There is no current on-market buy-back.
Quotation
Shares in Advanced Braking Technology Ltd are listed on the Australian Securities Exchange (ASX:ABV).
6.
7.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2017
63
Advanced Braking Technology Ltd
STOCK EXCHANGE INFORMATION
Largest Fully Paid Ordinary Shareholders
The names of the twenty largest Shareholders at 31 August 2017, who hold 42.40% of the fully paid ordinary shares in the
Company, are:
Rank Name
WINDPAC PTY LTD
DASI INVESTMENTS PTY LTD
J P MORGAN NOMINEES AUSTRALIA LIMITED
CAPITAL H MANAGEMENT PTY LTD
SCINTILLA STRATEGIC INVESTMENTS LIMITED
MR PETER RODNEY BOWER
MR CRAIG GRAEME CHAPMAN
RP INVEST PTY LTD
CHARMED5 PTY LTD
MR KIM AARON MULLER
MYALL RESOURCES PTY LTD
WINDPAC PTY LTD
WINDPAC PTY LTD
MR DALE ALBERT MONSON + MRS DAGMAR ERNA MONSON
M/S TRACEY-ANN PALMER
KIZOGO PTY LTD
GREYINVEST PTY LTD
ONMELL PTY LTD
SLADE TECHNOLOGIES PTY LTD
TOKEN NOMINEES PTY LTD
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Total
Number of
Shares
122,332,918
106,324,578
88,184,738
78,955,083
68,500,000
61,000,000
50,000,000
46,500,000
40,000,000
36,019,628
29,975,000
29,166,668
24,833,334
24,411,358
24,144,893
22,767,402
20,500,000
20,000,000
20,000,000
19,000,000
% of
Issued
Shares
5.56
4.83
4.01
3.59
3.11
2.77
2.27
2.11
1.82
1.64
1.36
1.33
1.13
1.11
1.10
1.04
0.93
0.91
0.91
0.86
932,615,600
42.40
64
Advanced Braking Technology Ltd
19 Creative Street
Wangara, Western Australia 6065
Advanced Braking Technology Ltd