ADVANCED BRAKING TECHNOLOGY LTD
AND CONTROLLED ENTITIES
ABN 66 099 107 623
ANNUAL REPORT
2020
ADVANCED BRAKING TECHNOLOGY LTD
AND CONTROLLED ENTITIES
ABN 66 099 107 623
CORPORATE DIRECTORY
Directors
Dagmar Parsons
David Slack
Adam Levine
Mark Lindh
Company Secretary
Kaitlin Smith
Registered Office
19 Creative Street
Wangara, WA 6065
Telephone: + 61 8 9302 1922
Telephone: 1800 317 543
Auditors
Moore Australia Audit (WA)
Level 15, Exchange Tower
2 The Esplanade
Perth, WA, 6000
Country of Incorporation
Australia
Legal form of entity
Listed public company
Chief Executive Officer
John Annand
Chief Financial Officer
Paige Exley
Bankers
National Australia Bank Ltd
12 / 100 St Georges Terrace
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
ASX Home Branch
Australian Securities Exchange (ASX)
Level 40, Central Park
152-158 St George’s Terrace
Perth, WA, 6000
ASX Code
ABV – Ordinary shares
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
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TABLE OF CONTENTS
TABLE OF CONTENTS
CORPORATE DIRECTORY
TABLE OF CONTENTS
CHAIRMAN’S REVIEW
CHIEF EXECUTIVE OFFICER’S OPERATIONAL REVIEW
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2020
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2020
DIRECTORS’ DECLARATION
INDEPENDENT AUDITOR’S REPORT
SHAREHOLDER INFORMATION
2
3
4
5
9
19
20
21
22
23
24
58
59
64
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
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CHAIRMAN’S REVIEW
CHAIRMAN’S REVIEW
Dear Shareholder,
During FY20, Advanced Braking Technology Ltd (‘ABT’ or the ‘Company’) continued to deliver on its promise to stabilise
its financial performance. With the repayment of the R&D prepayment loan facility and the extinguishment of the
convertible notes the Company is, with the exception of some minor equipment leases, now debt free. In addition,
ABT improved its financial performance through increased sales, improved margins and a reduction in expenditure,
resulting in a positive cash flow from operations for the year.
Despite the COVID-19 challenge, business operations continued to function effectively and service levels were
maintained. ABT’s primary customer base remained within the mining and civil construction industries, which
continued to operate during this challenging period. Thanks to our suppliers, our supply chain continued to function,
which has ensured the continuity of business operations without compromising the supply of products to our
customers, both here in Australia and internationally. In particular, the support the Harrop Engineering team provided
from Melbourne, under lockdown restrictions is greatly appreciated and acknowledged.
Notwithstanding those added challenges, ABT focused on its clearly defined strategic direction, which led to further
diversification of our product portfolio, customer base, industries and geographic regions. New mining customers
include Fortescue Metals Group and Newmont’s Tanami operations. In addition, we can count Scania Australia, as an
OEM for mining trucks and John Holland & CBP Contractors within the civil construction industry, as new ABT
customers.
During the year, the Company entered into a Technology Licence Agreement with VEEM Ltd. VEEM will manufacture
and supply ABT’s specialised park brake mechanism for the Thales’ Hawkei Protected Mobility Vehicle – Light project.
The Customer, Thales Australia Limited (‘Thales’) is part of the Thales Group, the world leading aerospace, defence,
transport and security technology company headquartered in Paris, France. Besides opening up the opportunity to be
recognised as an Original Equipment Manufacturer’s (OEM) product designer, ABT also achieved the strategic goal of
securing its first long-term supply agreement.
The Company is also encouraged by early stage enquiries about our braking solutions received from international
companies involved in autonomous and electric vehicles. The use of electric and autonomous vehicles within the
global mining industry continues to gather pace and ABT is actively engaged with the developers of this emerging
technology. Our brakes are now installed on multiple electric vehicle platforms around the world, which are either
being demonstrated or trialled at mine sites in Australia, Europe, Canada and South Africa.
In addition to product development and sales, ABT continued to strengthen its governance and operations to allow
the Company to implement its growth strategy. And, as we look to grow the business through organic growth, ABT
will also continue to investigate opportunities that will allow it to achieve size and to significantly upscale the business
through either acquisitions, strategic partnerships or joint ventures.
I would like to thank the Board and the entire ABT team for their efforts and contribution. The progress our staff, led
by John Annand and the leadership team, have made throughout the year has positioned us well for the future.
I would also like to thank our shareholders for their continued support of Advanced Braking Technology.
Dagmar Parsons
Chairman
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
4
CHIEF EXECUTIVE OFFICER OPERATING AND FINANCIAL REVIEW
CHIEF EXECUTIVE OFFICER’S OPERATING AND FINANCIAL REVIEW
Overview
Advanced Braking Technology Ltd designs, manufactures and distributes its innovative braking solutions worldwide. From its head
office in Perth, Western Australia, ABT continues to develop its product portfolio for a diverse range of industries that have a strong
requirement for safety and environmental responsibility, including the mining, defence, civil construction and waste management
industries.
ABT’s innovative braking solutions are well known for their unparalleled safety, improved productivity, zero emissions and
durability in the world’s harshest conditions. As its reputation has grown, demand for ABT's brakes has expanded internationally
with its braking solutions being used in all seven continents across the globe. Approximately 30% of the operating sales comes from
overseas locations including Canada, Europe, Asia-Pacific and South Africa.
During FY20, ABT offered 3 key products:
• ABT Failsafe Brakes
• ABT Failsafe Emergency Driveline Brakes
•
Terra Dura Brakes
During FY20, the Company continued to deliver improvements in our financial and operational performance. These improvements
included:
•
•
becoming substantially debt free during the year with $2.25 million of debt extinguished;
improving its financial position through increased sales, improved margins and a reduction in expenditure, resulting in a
positive cash flow from operations for the year;
further diversifying our product portfolio, customer base and the industries to which we supply our innovative braking
solutions; and
strengthening our Intellectual Property and patent protection.
•
•
The improvements noted above have set the Company up for a strong FY21 and will support the implementation of its growth
strategy.
In addition to product development and sales, the Company continues to work on the intangible aspects of the business including
corporate culture, systems and processes and stakeholder management, all of which improves business performance and creates
the foundation to allow the Company to implement its strategy.
Impact of COVID-19
In FY20, the impact on ABT’s operations due to coronavirus (COVID-19) was not material. ABT continues to review the COVID-19
operating environment and has amended its business operations to reflect the changing operating environment. The Company’s
primary customer base remains within the mining and civil construction industries, which to-date have continued to operate during
this challenging period. The Company has benefited from the financial assistance measures provided by both the Federal and
Western Australian governments, to help protect both the business operations and its employees. During FY20, ABT received
approximately $0.11 million in financial assistance.
Financial Summary
ABT achieved revenues of $9.08m for FY20 (FY19: $7.43m), which represents approximately a 22% increase on the prior year. The
net profit for the year was $0.171m (FY19: net loss $1.713m), an improvement of 110% on the prior year and a $1.88m turnaround
for the Company. These results were achieved through an increase in sales revenue and a decrease in expenses, when compared
to FY19.
The Company’s net assets as at 30 June 2020 have increased approximately 96% or $1.96m on FY19 balances, due to
a reduction in debt funding via the conversion of convertible notes to nil from $1.63m in FY19. The Company’s total
assets have remained at a similar level to the prior year, with an increase of 4% in FY20 to $5.96m from the FY19
balance of $5.72m.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
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CHIEF EXECUTIVE OFFICER OPERATING AND FINANCIAL REVIEW
Operating Revenue
The operating revenue in FY20 of $8.35m (FY19: $6.85m) was achieved primarily from sales of the Company’s core
Failsafe product and associated spares and consumables into the mining and civil construction industries.
The product margin for brake kits and consumable sales increased during the year to 48.5%, which was an improvement on FY19
when a product margin of 46.9% was achieved. The gross margin for FY20 is 46.3% (FY19: 41.6%).
There was a reduction in the estimated R&D tax incentive refund for the year of $520k (FY19: $600k), resulting from lower than
historical staff numbers and an increase in the provision engineering services to customers, which resulted in less being spent on
internal research and development (R&D) activities.
Expenses
Expenses for FY20 totalled $4.43m (FY19: $5.14m) and resulted in a net profit for the year of $0.17m (FY19: net loss $1.71m).
During the twelve-month period to 30 June 2020, cost saving initiatives resulted in savings of $711k compared to the prior year.
The impact of these cost savings when combined with the improved sales and margin performance, has resulted in a net profit for
FY20. The Company’s improved performance during FY20 contributed to the extinguishment of $2.25m of borrowings and resulted
in a net cash inflow from operating activities for the year.
Strategy implementation and product development
With the improved financial and operational performance achieved during FY20, the Company is now well placed to
implement its growth strategy, which is depicted below.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
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CHIEF EXECUTIVE OFFICER OPERATING AND FINANCIAL REVIEW
The growth strategy will be implemented through:
-
-
-
-
organic growth of our existing business through continual internal innovation;
pursuing high impact growth opportunities in markets that require innovative braking systems for transport
and mobility solutions of the future;
inorganic growth through implementing our Joint Ventures, Partnering and Acquisitions strategy; and
increasing control of our supply chain.
Diversification has been a key theme for the Company in FY20 and this will continue into FY21 through the further
diversification of:
•
•
•
•
•
our product offering;
the industries which we supply;
our customer base;
the geographic locations in which our products are found; and
our network of suppliers and distributors.
This objective was achieved in FY20 by being successful in securing design work and product sales within the defence,
waste management and civil construction industries, having secured contracts with Thales Australia, Cleanaway and
the Lendlease Samsung Bouygues Joint Venture. The Company was also successful in supplying Failsafe brakes into
the significant Chilean mining industry for the first time, through Minecorp-Chile; as well as supplying brakes to the
Department of the Environment and Energy for use by the Australian Antarctic Division. As a result of these contracts,
ABT braking solutions can now be found in all seven continents around the world.
With a focus on exploiting our existing product range and capitalising on our historical R&D, the Company is well
placed to increase sales during FY21 to a broader range of customers in a diverse range of industries across a number
of geographic regions. Our future product offering will be primarily based on the existing Failsafe and Terra Dura brake
technology. The vehicle variants to which these products can be fitted will be prioritised based on market intelligence
and listening to the requirements of the customer, whilst at the same time ensuring an acceptable return on
investment is achieved.
The Company will continue to develop its product offering through ongoing R&D to ensure it remains relevant long
into the future as automation and electrification of vehicles gains momentum around the world, and the
environmental impacts from non-exhaust vehicle emissions, including brake dust particles, are better understood by
government and consumers.
Growth and Outlook
For FY21 and beyond, revenues will be derived from a broader product offering. Furthermore, the Company has
recently diversified its customer base to include customers not only in our primary mining market, but also the
defence, waste management and civil construction industries.
ABT not only has the product portfolio to meet the existing needs of both current and future customers, but we believe
we have the intellectual property that will ensure we can participate in future braking technology that will not only
assist the environment but will help create a sustainable future for vehicle transportation into the future.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
7
CHIEF EXECUTIVE OFFICER OPERATING AND FINANCIAL REVIEW
The growth plan will deliver a greater product offering to a broader customer base across diverse industries which in
turn will lead to increasing revenues, profits and ultimately shareholder value.
Acknowledgements
I would like to thank the Board for their guidance and all ABT staff for their support and continued dedication during
what was a challenging period.
Also, I would like to thank the shareholders of ABT who have remained invested in the ABT story. With the strong
foundations we now have in place, I believe we are now well placed to reward shareholders for their continued
support.
John Annand
Chief Executive Officer
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
8
DIRECTORS’ REPORT
The Directors of Advanced Braking Technology Ltd (‘Company’ or ‘ABT’) and its controlled entity Advanced Braking Pty Ltd (the
‘Group’ or the ‘Consolidated Group’ or the ‘Consolidated Entity’), submit the annual financial report for the financial year ended 30
June 2020. For the purposes of the Corporations Act 2001, the Directors provide the report as follows:
Directors
The names and particulars of the Directors of the Company during or since the end of the financial year are:
Ms Dagmar Parsons Dipl.-Ing. (TH), MBA, GAICD Chairman and Non-Executive Director, Appointed 22 April 2018
Ms Parsons has more than 25 years of experience in the mining and resources industry across a range of functions, working in
senior executive roles with Worley Parsons, AECOM and Downer.
Ms Parsons has worked with major national and multinational entities to drive critical market success by providing strategic
direction, visionary leadership and innovative thinking. As a Mechanical Engineer, Ms Parsons has developed an in-depth
knowledge of engineering, manufacturing, and service industry environments in the Mining, Oil and Gas, Power and Infrastructure
sectors.
Ms Parsons has considerable experience in transforming and growing complex businesses across diverse corporate, operational
and entrepreneurial roles in Australia, Asia and Europe. She has a strong appreciation of the role of good governance in setting,
implementing and over sighting strategic imperatives. Ms Parsons is the Managing Director of Rail Safety Systems Pty Ltd and a
director of Transport Safety Systems Group Ltd. Ms Parsons holds a Masters Degree in Mechanical Engineering and a Masters in
Business Administration. She is also a graduate 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. Mr Slack is also a director of
a private company, Transport Safety Group Ltd, which has developed an innovative wireless solar rail crossing technology in the
commercialisation phase. 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 Chair 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 LL.B (Hon), B.Ec (Acc). Non-Executive Director, Appointed 9 April 2013
Mr Levine, a lawyer by profession, has over 25 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 Chair of law firm Rockwell Bates, Mr Levine has grown the storied 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 focused on
building and protecting clients’ wealth.
Mr Levine is also the Executive Chair and Founder of the Rockwell Group which undertakes principal investments into regulated
financial and professional 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 in excess of most leading national and
global private equity funds.
Mr Levine is the Chair of the Audit & Risk Committee (a position which he has held for several years). He brings a very analytical
and inquiring mind when engaging with, challenging and supporting the key Executives of the company.
His current outside directorships include Rockwell Group Holdings Pty Ltd, Rockwell Bates 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. He is also a Trustee Director of the Australian
Jewish Museum Foundation Limited.
Mr Mark Lindh Non-Executive Director, Appointed 27 June 2017
Mr Mark Lindh is an investment banker and corporate advisor, with in excess of 15 years of experience in Australian equity and
debt markets as well as advising on capital raisings, mergers and acquisitions and investor relations.
He is a founding executive director of Adelaide Equity Partners Limited, an Australian investment and advisory company and is non-
executive director of Bass Oil Limited and Aerometrex Ltd.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
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DIRECTORS’ REPORT
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 Mark Lindh
Company
Period of Directorship
Bass Oil Limited (ASX code: BAS)
Aerometrex Ltd (ASX code: AMX)
2014 to date
2019 to date
Chief Executive Officer
Mr John Annand B.Bus, CA, AGIA ACG, A Fin
Mr Annand brings significant experience to the role of CEO gained in executive finance and operations roles with ASX-listed and
multi-national resources and pharmaceutical companies. Prior to his current role at ABT, he held the role of Acting CEO and Chief
Financial Officer at Norwest Energy NL and more recently Chief Operations Officer at AusCann Group Holdings Limited. He also
held a number of management roles during his 16 years with Woodside Energy including Commercial Manager and Finance
Manager.
Mr Annand’s prior experience has seen him responsible for strategy development and execution, marketing, research and
development, operations, supply chain management, contract management, capital raisings, investor relations and corporate
governance. He also brings to the CEO role customer, stakeholder, and joint venture relationship skills gained from working across
international jurisdictions and diverse industries.
In addition to his accounting and corporate governance qualifications, John also holds a Bachelor of Business and a Graduate
Diploma in Applied Finance and Investment.
Chief Financial Officer
Ms Paige Exley B.Com, CA, FGIA FCG (CS)
Ms Exley is a Chartered Accountant and Chartered Secretary, with over 20 years of experience in financial and management
accounting. She brings significant experience to the position, gained in finance and governance roles with ASX-listed companies in
Australia, with domestic and overseas operations, in industries such as resources, mining services, information technology,
professional services, not-for-profit and retail. Ms Exley’s prior experience has seen her responsible for business finance functions,
asset development, corporate compliance, continuous process improvement, treasury management, capital raisings, investor
relations and corporate governance.
Company Secretary
Ms Kaitlin Smith B.Com (Acc), CA
Ms Smith was appointed joint Company Secretary 19 July 2018 and Company Secretary on 10 August 2018. Ms Smith provides
Company Secretarial and Accounting services to various public and proprietary companies. She holds a Bachelor of Commerce
(Accounting) and is a Chartered Accountant.
Principal activities
The principal activity of the Consolidated Group during the course of the year was the commercialisation, research, development
and manufacture of the ABT Failsafe Brakes, ABT Failsafe Emergency Driveline Brakes and Terra Dura Brakes and associated braking
systems.
Operating results
The results of the Consolidated Group for the year ended 30 June 2020 were a net profit from continuing activities, after income
tax, of $171,000 (2019: loss of $1,713,000). Revenues from trading activities were $8,349,000 (2019: $6,847,000). Revenues from
other activities were $730,000 (2019: $583,000).
Dividends
There have been no dividends paid or declared by the Company in the last two years.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
10
Summary of material transactions
DIRECTORS’ REPORT
Issue of Securities
On 24 July 2019, ABT issued 855,636 ordinary fully paid shares to a consultant, KS Capital Pty Limited, in lieu of $11,000 in fees for
services under an agreement to provide Corporate Advisory Services to ABT dated 7 May 2019.
The Company also issued 5,000,000 unlisted options to KS Capital Pty Limited on 24 July 2019, exercisable at 2.5 cents ($0.025) at
any time on or before 30 June 2022, under an agreement to provide Corporate Advisory Services to ABT dated 7 May 2019. The
issue of unlisted options was valued at approximately $63,523.
On 29 July 2019, ABT issued 10,700,000 convertible notes to new note holders, each with a face value of $0.02, maturing on 31
December 2019. The new notes were issued for $214,000 in proceeds following the redemption of $214,000 by existing convertible
note holders that matured on 30 June 2019.
On 29 July 2019, ABT issued 25,000,000 convertible notes to a related party of Director, David Slack in satisfaction of the outstanding
$500,000 for the related party loan facility. Each convertible note had a face value of $0.02 and matured on 31 December 2019.
Satisfaction of Debt
During September 2019, ABT drew down the second tranche of $200,000 of the R&D Loan Facility for up to $620,000 with R&D
Capital Partners Pty Ltd. The first tranche of $420,000 was received in April 2019. During December 2019, the Company repaid the
R&D prepayment loan facility of $620,000 to R&D Capital Partners Pty Ltd, following the receipt of the ATO R&D tax incentive
refund of approximately $689,000.
During November and December 2019, the Company’s convertible notes totalling $1.631m, that were due to mature on 31
December 2019, were extinguished by the conversion of $1.624m through the issue of 81,243,334 shares at $0.02 per share and
$0.007m of the notes were repaid to a note holder in cash.
With the repayment of the R&D prepayment loan facility and the extinguishment of the convertible notes, the Company, with the
exception of some minor equipment leases, had no material debt.
Technology Licence Agreement
During the period, ABT entered into a Technology Licence Agreement with VEEM Ltd (VEEM) for VEEM to manufacture and supply
ABT’s specialised park brake mechanism for Thales’ Hawkei Protected Mobility Vehicle – Light project.
In May 2019, ABT was selected to provide brake related design, prototype development and testing services to Thales, who have
been contracted by the Commonwealth of Australia to supply 1,100 Hawkei PMV-L vehicles as part of the LAND 121 project.
Following the successful design and testing of a prototype, ABT has been working closely with Thales to determine how the
Company was best placed to participate in the manufacture and supply phase. It was agreed that ABT would participate through a
Technology Licence Agreement that protects its Intellectual Property and provides the best risk and return outcome.
ABT has licenced the manufacture and supply of 1,100 park brake mechanisms for consideration of approximately $630,000 in
licence and engineering support fees and product revenue for the supply of specified components for 1,100 brake mechanisms, by
the earlier of 29 April 2022 or the date that VEEM sells 1,100 brake mechanisms to Thales Australia Ltd. In addition, ABT will supply
spare parts and consumables for the life of product.
VEEM’s supply of the brake mechanisms to Thales Australia Ltd for Thales’ Hawkei Protected Mobility Vehicle – Light project
commenced in July 2020.
Significant changes in the state of affairs
On 31 October 2019, Ms Paige Exley was appointed as Chief Financial Officer of the Group.
On 1 June 2020, the Company appointed Mr Ben Suda as Director of Sales & Marketing of the Group, following the resignation of
Mr Geoff Lewis as Sales Director in February 2020.
During the reporting period, global health warnings were made by the World Health organisation (WHO) regarding the Coronavirus
(COVID-19) pandemic and the Australian Governor General declared that a human biosecurity emergency exists on 18 March 2020.
There have been widespread and varying operational impacts to many industries that form ABT’s supply chain and customers in
Australia and overseas. During FY20, the impact on ABT’s operations was not material and ABT amended its business operations
11
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
DIRECTORS’ REPORT
to reflect the changing operating environment. The Company’s primary customer base remains within the mining and civil
construction industries, which to-date have continued to operate during the period of emergency. The Company has benefited
from the financial assistance measures provided by both the Federal and Western Australian governments, to help protect both
the business operations and its employees. During FY20, ABT received approximately $0.11 million in financial assistance from
government sources.
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 impact of COVID-19 pandemic is ongoing and while it has been financially positive for the Group up to 30 June 2020, it is not
practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and
is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing
requirements, quarantine, travel restrictions and any economic stimulus that may be provided.
On 17 September 2020, ABT received $534,000 as a refundable tax offset for eligible research and development expenditure
relating to the development of its innovative braking solutions during FY20, following the lodgement of the Company’s FY20 income
tax return.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the
company's operations, the results of those operations, or the company's state of affairs in future financial years.
Future developments
The Economic Entity will continue to commercialise the Failsafe sealed wet braking system business in Australia and Overseas
markets, along with the recently redesigned Terra Dura sealed dry braking system.
Directors’ interests
The relevant interest of each Director in the share capital of the Company, as notified by the Directors to the Australian Securities
Exchange in accordance with s205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Director
D Parsons
D Slack
A Levine
M Lindh
Directors’ meetings
Ordinary shares (as at 30/09/2020)
840,000
69,169,252
777,778
3,033,334
During the financial year there were 13 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
Number
eligible to
attend
13
13
13
13
Number
attended
13
13
13
13
Number
eligible to
attend
5
5
5
5
Number
attended
5
5
5
5
Remuneration &
Nomination Committee
Number
Number
attended
eligible to
attend
3
3
3
3
3
3
3
3
D Parsons
D Slack
A Levine
M Lindh
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
12
DIRECTORS’ REPORT
REMUNERATION REPORT (AUDITED)
This remuneration report for the year ended 30 June 2020 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.
Directors
Name
D Parsons
D Slack
A Levine
M Lindh
Position
Non-Executive Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Appointment Date
22 April 2018
9 September 2009
9 April 2013
27 June 2017
Executives
Name
J Annand
P Exley
A Van Litsenborgh
G Lewis
B Suda
Position
Chief Executive Officer
Chief Financial Officer
Engineering Manager
Sales Director
Director of Sales & Marketing
Appointment Date
20 August 2018
20 November 2018
10 December 2018
11 March 2019
1 June 2020
Board Oversight of Remuneration
Resignation Date
-
-
-
-
Resignation Date
-
-
-
28 February 2020
-
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 executives.
Remuneration Policy
The remuneration policy of the Company is to pay executive directors and 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.
The following table shows the gross revenue, net profit / loss and ABV share price of the Company at the end of each respective
financial year.
Company Performance
Total Revenue ($‘000)
Net profit / (loss) ($‘000)
ABV Share price
30 June 2020
30 June 2019
30 June 2018
30 June 2017
30 June 2016
9,079
171
2.4 cents
7,430
(1,713)
1.9 cents
7,870
(1,656)
2.8 cents
7,686
(565)
5.5 cents
5,352
(1,758)
6.4 cents
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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
13
DIRECTORS’ REPORT
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.
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. During the
year ended 30 June 2020, Non-Executive Mr D Slack, elected to waive payment of his annual director’s fees for the period July 2019
to December 2019.
Voting and comments from the Company’s 2019 Annual General Meeting
At the Company’s most recent Annual General Meeting held in November 2019, over 97% of eligible votes were cast for the
adoption of the 30 June 2019 remuneration report. As no comments were received from shareholders who had voted against the
resolution at that meeting, the Board does not propose any action with respect to its resolution at this time. The Board considers
its remuneration policy to be appropriate and properly aligned with the current size and performance of the Group.
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. ABT undertakes an annual remuneration review to determine the total
remuneration positioning against the market.
Remuneration Structure
In the financial year ended 30 June 2020, 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:
Payment Vehicle
Purpose
Link to performance
Remuneration
component
Fixed
remuneration
Short-term
incentive
component
(STI)
by
total
Represented
employment cost (TEC).
Comprises base salary, plus
superannuation contributions.
Paid in cash or share based
incentives for KMPs.
A share-based scheme was put
in place for KMP executives.
Rewards executives
for
to
contribution
their
achievement of Group and
business unit outcomes.
Set with reference to role,
market and experience.
Based on annual appraisal and
reference to market rates.
Linked to key performance indicators
including group performance such as
sales revenue, profit targets, and
performance against budget and
targets
product
such
commercialisation.
All grants are at the discretion of the
Board of Directors.
Linked
Shareholder
Total
Return, sales budgets and profit
targets.
At judgement and discretion of the
Board of Directors.
to
Long-term
incentive
component (LTI)
Paid in cash or share based
incentives for KMPs.
During the F20 year, a new
share-based scheme was put
in place for KMP executives.
Rewards executives for
to
their
performance of Group.
contribution
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
14
DIRECTORS’ REPORT
Equity holdings and transactions
The movement during the reporting period in the number of securities of Advanced Braking Technology Ltd held, directly,
indirectly or beneficially, by each Director or Executive, including their related party entities, are as follows:
Held at 1 July
2019
Granted as
compensation
during year
Exercise of
options during
year
Other
movement
during year
Held at date of
resignation
Held at 30
June 2020
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000,000
-
-
25,000,000
-
36,000
-
-
-
36,000
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-
n/a
-
500,000
67,645,664
777,778
3,033,334
71,956,776
-
36,000
-
-
-
36,0000
i) Ordinary Shares
(a) Directors
D Parsons
D Slack
A Levine
M Lindh
Total
(b) Executives
J Annand
P Exley
T Van Litsenborgh
G Lewis
B Suda
500,000
42,645,664
777,778
3,033,334
46,956,776
-
-
-
-
-
Total
1. G Lewis ceased employment on 28 February 2020
2. B Suda Commenced employment on 1 June 2020
-
ii) Unlisted Options
(a) Directors
D Parsons
D Slack
A Levine
M Lindh
Total
(b) Executives
J Annand
P Exley
T Van Litsenborgh
G Lewis
B Suda
Total
Held at 1 July
2019
Granted during
the period as
compensation 1
-
-
-
-
-
11,916,217
5,958,109
5,958,109
-
-
23,832,435
-
-
-
-
-
-
-
-
-
-
-
Exercised
during the
period
Held at 30 June
2020 (or date of
resignation)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,916,217
5,958,109
5,958,109
-
-
23,832,435
Vested and
exercisable at
30 June 2020
-
-
-
-
-
-
-
-
-
-
-
1. The unlisted options granted and issued during the period are unvested and subject to vesting conditions. Refer to Note
22 for further details.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
15
Details of Remuneration of Directors and Executives
DIRECTORS’ REPORT
The details of the nature and amount of remuneration for each Director and Executive (Key Management Personnel) of the
Company are:
Year 2020
Directors
D Parsons
D Slack
A Levine
M Lindh
Total
Year 2019
Directors
D Parsons
D Slack
A Levine
M Lindh
Total
Short term benefits
Salary & Fees
$000’s
85
27
58
55
225
Share based
remuneration
$000’s
-
-
-
-
-
Short term benefits
Salary & Fees
$000’s
86
-
55
60
201
Share based
remuneration
$000’s
-
-
-
-
-
Post-Employment
Superannuation
$000’s
8
3
2
5
18
Post-Employment
Superannuation
$000’s
8
-
5
-
13
Termination
Benefits
$000’s
-
-
-
-
-
Termination
Benefits
$000’s
-
-
-
-
-
Total Performance based
Remuneration
$000’s
93
30
60
60
243
%
-
-
-
-
-
Total Performance based
Remuneration
$000’s
94
-
60
60
214
%
-
-
-
-
-
1. 1. Ms D Parsons - $1,038 of Directors fee paid during the period related to services provided in the financial year ended 30
June 2018.
Year
Executives
J Annand
P Exley
T Van Litsenborgh
G Lewis
B Suda
Total
2020
Note
1
2
3
2020
Short-term benefits
Salary & fees
Bonus or Sales
Commission
$000’s
303
157
182
146
18
806
$000’s
-
-
-
-
-
-
Share based
remuneration
$000’s
53
26
26
-
-
105
Post-
Employment
Superannuation
$000’s
26
15
17
13
2
73
Performance-
based
remuneration
%
14
13
12
-
-
11
Total
$000’s
382
198
225
159
20
984
1. P Exley was appointed Chief Financial Officer on 31 October 2019.
2. G Lewis ceased employment on 28 February 2020.
3. B Suda commenced employment on 1 June 2020.
Year
Executives
P Hildebrandt
M Johnston
D Robinson
J Annand
P Exley
T Van Litsenborgh
G Lewis
Total
2019
Note
1
2
3
4
5
6
7
2019
Short-term benefit
Salary & Fees
Bonus or Sales
Commission
$000’s
163
40
170
241
68
96
65
843
$000’s (8)
-
-
15
-
-
-
-
15
Share based
remuneration
$000’s
-
-
-
-
-
-
-
-
Post-
Employment
Superannuation
$000’s
15
3
14
21
6
9
6
74
Performance-
based
remuneration
%
-
-
-
-
-
-
-
-
Total
$000’s
178
43
199
262
74
105
71
932
1. P Hildebrandt ceased employment on 3 December 2018.
2. M Johnston ceased employment on 22 August 2018.
3. D Robinson ceased employment on 31 March 2019.
4.
5. P Exley commenced employment on 20 November 2018.
J Annand commenced employment on 20 August 2018 as Chief Financial Officer and was appointed CEO on 3 December 2018.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
16
DIRECTORS’ REPORT
6. T Van Litsenborgh commenced employment on 10 December 2018.
7. G Lewis commenced employment on 31 March 2019.
8. Sales commissions were earned in 2018, of which, commissions relating to the final quarter of FY2018 were paid in first quarter
of FY 2019 in the amount of $14,539 to Mr D Robinson
No STI’s, LTI’s or Sales commissions were accrued or earned by KMP’s for the period 1 July 2018 to 30 June 2019.
Cash Bonuses, Performance-related Bonuses and Share-based Payments
Details of STI’s and LTI’s are as follows:
• No STI’s were accrued or provided during FY2020
• No STI’s or LTI’s were accrued or earned during FY2019.
FY20 Long term incentive plan
On 27 November 2019, shareholders approved the adoption of a Share Option Plan and the grant of 23,832,435 unlisted options
with an exercise price of $0.04 per ABV share and an expiry date of 30 June 2023. The unlisted options were issued on 26 February
2020 to the Executives as below, vesting over a 3-year period.
Executive
John Annand
Paige Exley
Tony Van Litsenborgh
Total
Number of KMP
Options - Vesting 1
year from issue
2,979,054
1,489,527
1,489,527
5,958,108
Number of KMP
Options - Vesting 2
years from issue
2,979,054
1,489,527
1,489,527
5,958,108
Number of KMP
Options - Vesting 3
years from issue
5,958,109
2,979,055
2,979,055
11,916,219
Total KMP Options
on Expiring 30 June
2023
11,916,217
5,958,109
5,958,109
23,832,435
The earliest vesting date for the KMP Options is 26 February 2021. Refer to Note 22 for details of the valuation methodology and
assumptions for these share options.
Executive Contracts
Mr John Annand, Mr Tony Van Litsenborgh, Ms P Exley, and Mr Ben Suda are employed through employment contracts.
The terms of the Employment Contracts with all Executives require both parties to provide three months of notice to terminate
the contract.
Transactions with key management personnel
Refer to Note 26 for details of transactions with Directors and key management personnel.
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 $20,746 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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
17
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
2019
$’000
2020
$’000
43
12
55
48
11
59
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.
Dagmar Parsons
Non-Executive Chairman
30 September 2020
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
18
Moore Australia Audit (WA)
Level 15, Exchange Tower,
2 The Esplanade, Perth, WA 6000
PO Box 5785, St Georges Terrace, WA 6831
T +61 8 9225 5355
F +61 8 9225 6181
www.moore-australia.com.au
AUDITORS’ INDEPENDENCE DECLARATION
UNDER S307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF ADVANCED BRAKING TECHNOLOGY LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2020 there have been no
contraventions of:
i.
ii.
SL Tan
Partner
The auditor independence requirements as set out in the Corporations Act 2001 in relation to the
audit; and
Any applicable code of professional conduct in relation to the audit.
Moore Australia Audit (WA)
Chartered Accountants
Signed at Perth on the 30thday of September 2020
Moore Australia Audit (WA) – ABN 16 874 357 907
An independent member of Moore Global Network Limited - members in principal cities throughout the world.
Liability limited by a scheme approved under Professional Standards Legislation
19
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE 13CONSOLIDATED GROUP
2019
$'000
6,847
(4,006)
2020
$'000
8,349
(4,482)
NOTES
3
Revenues from trading activities
Cost of sales
Gross Profit
Revenues from other activities
Expenses
Amortisation of intellectual property
Audit and accounting fees
Bad and doubtful debts
Consulting and contract labour expenses
Consumables and minor equipment
Depreciation expense
Employee expenses
Finance expenses
Information technology expenses
Insurance
Inventory obsolescence expense
Legal fees
Marketing and advertising expenses
Patent expense
Property expenses
Telephone and other communication
Travel and accommodation
Warranty expense
Other expenses
Total expenses
Profit / (loss) from continuing operations
Profit / (loss) before income tax
Income tax
Profit / (loss) after income tax
Other comprehensive income/(loss)
Items that may be reclassified subsequently to profit or loss
Total comprehensive profit / (loss) for the period
Basic profit / (loss) per share (cents)
3,867
2,841
730
583
(64)
(54)
(10)
(311)
(113)
(206)
(2,718)
(295)
(49)
(140)
(1)
(33)
(26)
(40)
(47)
(32)
(114)
(50)
(123)
(64)
(48)
(4)
(312)
(170)
(159)
(2,793)
(361)
(62)
(190)
(143)
(70)
(26)
(32)
(166)
(38)
(212)
(54)
(233)
(4,426)
(5,137)
171
171
-
171
(1,713)
(1,713)
-
(1,713)
-
-
171
(1,713)
Cents
0.05
Cents
(0.61)
2
3
3
3
4
7
The consolidated statement of profit and loss and other comprehensive income should be read in conjunction with the notes
to the financial statements.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
20
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITI3CONSOLIDATED GROUP
NOTES
2020
$'000
2019
$'000
CURRENT ASSETS
Cash and Cash equivalents
Trade and other Receivables
Inventories
Other current assets
Total current assets
NON-CURRENT ASSETS
Property, plant and equipment
Right of use assets
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
Reserves
Accumulated losses
TOTAL EQUITY
8
9
10
11
13
14
15
16
17
18
17
18
19
20
21
516
716
1,275
1,295
2,001
1,836
714
677
4,506
4,524
292
463
487
-
671
735
1,450
1,198
5,956
5,722
1,165
1,295
55
2,129
257
201
1,477
3,625
472
59
14
486
4
63
1,963
3,688
3,993
2,034
55,819
54,200
169
-
(51,995)
(52,166)
3,993
2,034
The consolidated statement of financial position should be read in conjunction with the notes to the financial statements.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
21
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
NOTES
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
Net cash provided by / (used in) operating activities
25
Cash flows from investing activities
Proceeds from disposal of property, plant and equipment
Purchase of property, plant and equipment
Net cash provided by / (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 / (used in) financing activities
CONSOLIDATED GROUP
2020
$'000
8,941
(9,274)
(247)
3
799
222
79
(26)
53
517
(944)
-
(48)
(475)
2019
$'000
7,391
(9,526)
(155)
1
838
(1,451)
-
(133)
(133)
1,154
(866)
1,483
(98)
1,673
Net increase / (decrease) in cash and cash equivalents held
(200)
89
Cash and Cash equivalents at the beginning of the financial year
Cash and Cash equivalents at the end of the financial year
8
716
516
627
716
The consolidated statement of cash flow should be read in conjunction with the notes to the financial statements.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
22
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED GROUP
At 1 July 2019
Profit for the year
Share-based payments
Total comprehensive income / (loss) for the year
Issue of ordinary shares
Transaction costs relating to share issues
Total transactions with owners
Attributable to equity holders of the parent
Issued
Capital
Accumulated
Losses
Other
Reserves
Total
$'000
$'000
$'000
$'000
54,200
(52,166)
-
-
-
1,636
(17)
1,619
171
-
171
-
-
-
-
-
169
169
-
-
-
2,034
171
169
340
1,636
(17)
1,619
At 30 June 2020
55,819
(51,995)
169
3,993
CONSOLIDATED GROUP
At 1 July 2018
Loss for the year
Total comprehensive income / (loss) for the year
Issue of ordinary shares
Transaction costs relating to share issues
Total transactions with owners
52,805
(50,453)
-
-
1,493
(98)
1,395
(1,713)
(1,713)
-
-
-
At 30 June 2019
54,200
(52,166)
-
-
-
-
-
-
-
2,352
(1,713)
(1,713)
1,493
(98)
1,395
2,034
The consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
23
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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.
These financial statements were authorised for issue by the Board of Directors on 30 September 2020.
New and amended accounting policies adopted by the Group
(a)
The Company has considered the implications of new or amended Accounting Standards which have become applicable
for the current financial report and the Company had to change its accounting policies as a result of adopting the
following standard:
• AASB 16 Leases
The impact of the adoption of this standard is discussed below:
Leases
The Group as lessee
At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease present, a right-of-
use asset and a corresponding lease liability are recognised by the Group where the Group is a lessee. However, all
contracts that are classified as short-term leases (ie a lease with a remaining lease term of 12 months or less) and leases
of low-value assets are recognised as an operating expenses on a straight-line basis over the term of the lease.
Initially the lease liability is measured at the present value of the lease payments still to be paid at the commencement
date. The lease payments are discounted at the interest rate implicit in the lease. If this rate cannot be readily
determined, the Group uses the incremental borrowing rate.
Lease payments included in the measurement of the lease liability are as follows:
–
–
fixed lease payments less any lease incentives;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the
commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
–
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options;
–
lease payments under extension options, if the lessee is reasonably certain to exercise the options; and
–
– payments of penalties for terminating the lease, if the lease term reflects the exercise of an option to terminate
the lease.
The right-of-use assets comprise the initial measurement of the corresponding lease liability, any lease payments made at or before
the commencement date and any initial direct costs. The subsequent measurement of the right-of-use assets is at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or useful life of the underlying asset, whichever is the shortest.
Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates to
exercise a purchase option, the specific asset is depreciated over the useful life of the underlying asset.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
24
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Initial Application of AASB 16: Leases
The Group has adopted the modified retrospective approach under AASB 16: Leases as at 1 July 2019. In accordance with AASB 16,
the comparatives for the 2019 reporting period have not been restated.
The Group has recognised a lease liability and right-of-use asset for all leases (with the exception of short-term and low-value leases)
recognised as operating leases under AASB 117: Leases where the Group is the lessee.
Lease liabilities are measured at the present value of the remaining lease payments. The Group's incremental borrowing rate as at 1
July 2019 was used to discount the lease payments.
The following practical expedients have been used by the Group in applying AASB 16 for the first time:
–
–
–
leases that have remaining lease term of less than 12 months as at 1 July 2019 have been accounted for in the same was
as short-term leases.
the use of hindsight to determine lease terms on contracts that have options to extend or terminate.
applying AASB 16 to leases previously identified as leases under AASB 117: Leases and Interpretation 4: Determining
whether an arrangement contains a lease without reassessing whether they are, or contain, a lease at the date of initial
application.
– not applying AASB 16 to leases previously not identified as containing a lease under AASB 117 and Interpretation 4.
The Group’s weighted average incremental borrowing rate on 1 July 2019 applied to the lease liabilities was 8%.
Principles of Consolidation
(b)
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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
25
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.
Foreign Currency Transactions and Balances
(c)
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
(d)
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)
(e)
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
(f)
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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
26
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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.
(g)
Income Tax
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.
(h)
Financial Instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the Group 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 (except for trade receivables) 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. Where available, quoted prices in an active market are used to determine fair value. In other
circumstances, valuation techniques are adopted.
Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant
financing component or if the practical expedient was applied as specified in AASB 15.63.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
27
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Classification and subsequent measurement
Financial liabilities
Financial instruments are subsequently measured at:
•
•
amortised cost; or
fair value through profit or loss.
A financial liability is measured at fair value through profit and loss if the financial liability is:
-
-
-
a contingent consideration of an acquirer in a business combination to which AASB 3: Business Combinations
applies;
held for trading; or
initially designated as at fair value through profit or loss.
All other financial liabilities are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest expense in profit or loss over the relevant period. The effective interest rate is the internal rate of return of the
financial asset or liability. That is, it is the rate that exactly discounts the estimated future cash flows through the
expected life of the instrument to the net carrying amount at initial recognition.
A financial liability is held for trading if:
-
-
-
it is incurred for the purpose of repurchasing or repaying in the near term;
part of a portfolio where there is an actual pattern of short-term profit taking; or
a derivative financial instrument (except for a derivative that is in a financial guarantee contract or a derivative
that is in effective a hedging relationships).
Any gains or losses arising on changes in fair value are recognised in profit or loss to the extent that they are not part of
a designated hedging relationship are recognised in profit or loss.
The change in fair value of the financial liability attributable to changes in the issuer's credit risk is taken to other
comprehensive income and are not subsequently reclassified to profit or loss. Instead, they are transferred to retained
earnings upon derecognition of the financial liability. If taking the change in credit risk in other comprehensive income
enlarges or creates an accounting mismatch, then these gains or losses should be taken to profit or loss rather than
other comprehensive income.
A financial liability cannot be reclassified.
Financial assets
Financial assets are subsequently measured at:
-
-
-
amortised cost;
fair value through other comprehensive income; or
fair value through profit or loss.
Measurement is on the basis of two primary criteria:
-
-
the contractual cash flow characteristics of the financial asset; and
the business model for managing the financial assets.
A financial asset that meets the following conditions is subsequently measured at amortised cost:
-
-
the financial asset is managed solely to collect contractual cash flows; and
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding on specified dates.
A financial asset that meets the following conditions is subsequently measured at fair value through other comprehensive income:
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding on specified dates;
-
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
28
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
-
the business model for managing the financial assets comprises both contractual cash flows collection and the
selling of the financial asset.
By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value
through other comprehensive income are subsequently measured at fair value through profit or loss.
The Group initially designates a financial instrument as measured at fair value through profit or loss if:
-
-
-
it eliminates or significantly reduces a measurement or recognition inconsistency (often referred to as
“accounting mismatch”) that would otherwise arise from measuring assets or liabilities or recognising the gains
and losses on them on different bases;
it is in accordance with the documented risk management or investment strategy, and information about the
groupings was documented appropriately, so that the performance of the financial liability that was part of a
Company of financial liabilities or financial assets can be managed and evaluated consistently on a fair value
basis;
it is a hybrid contract that contains an embedded derivative that significantly modifies the cash flows otherwise
required by the contract.
The initial designation of the financial instruments to measure at fair value through profit or loss is a one-time option
on initial classification and is irrevocable until the financial asset is derecognised.
Equity instruments
At initial recognition, as long as the equity instrument is not held for trading and not a contingent consideration
recognised by an acquirer in a business combination to which AASB 3: Business Combinations applies, the Group has the
option to make an irrevocable election to measure any subsequent changes in fair value of the equity instruments in
other comprehensive income, while the dividend revenue received on underlying equity instruments investment will
still be recognised in profit or loss. The Group currently has no equity instrument financial assets.
Regular way purchases and sales of financial assets are recognised and derecognised at settlement date in accordance
with the Company's accounting policy.
Derecognition
Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement
of financial position.
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (ie when the obligation in the contract is discharged, cancelled or
expires). An exchange of an existing financial liability for a new one with substantially modified terms, or a substantial
modification to the terms of a financial liability is treated as an extinguishment of the existing liability and recognition
of a new financial liability.
The difference between the carrying amount of the financial liability derecognised and the consideration paid and
payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
Derecognition of financial assets
A financial asset is derecognised when the holder's contractual rights to its cash flows expires, or the asset is transferred
in such a way that all the risks and rewards of ownership are substantially transferred.
All of the following criteria need to be satisfied for derecognition of financial asset:
-
-
-
the right to receive cash flows from the asset has expired or been transferred;
all risk and rewards of ownership of the asset have been substantially transferred; and
the Company no longer controls the asset (ie the Group has no practical ability to make a unilateral decision to
sell the asset to a third party).
On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount
and the sum of the consideration received and receivable is recognised in profit or loss.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
29
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
On derecognition of a debt instrument classified as at fair value through other comprehensive income, the cumulative
gain or loss previously accumulated in the investment revaluation reserve is reclassified to profit or loss.
On derecognition of an investment in equity which was elected to be classified under fair value through other
comprehensive income, the cumulative gain or loss previously accumulated in the investment revaluation reserve is not
reclassified to profit or loss but is transferred to retained earnings.
Impairment
The Group recognises a loss allowance for expected credit losses on:
-
-
-
-
financial assets that are measured at amortised cost or fair value through other comprehensive income;
contract assets (eg amounts due from customers under construction contracts);
loan commitments that are not measured at fair value through profit or loss; and
financial guarantee contracts that are not measured at fair value through profit or loss.
Loss allowance is not recognised for:
-
-
financial assets measured at fair value through profit or loss; or
equity instruments measured at fair value through other comprehensive income.
Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial
instrument. A credit loss is the difference between all contractual cash flows that are due, and all cash flows expected
to be received, all discounted at the original effective interest rate of the financial instrument.
The Group uses the following approach to impairment, as applicable under AASB 9: Financial Instruments:
-
the simplified approach
Simplified approach
The simplified approach does not require tracking of changes in credit risk at every reporting period, but instead requires
the recognition of lifetime expected credit loss at all times. This approach is applicable to:
-
trade receivables or contract assets that result from transactions within the scope of AASB 15: Revenue from
Contracts with Customers and which do not contain a significant financing component
In measuring the expected credit loss, a provision matrix for trade receivables is used taking into consideration various
data to get to an expected credit loss (ie diversity of customer base, appropriate groupings of historical loss experience,
etc).
Recognition of expected credit losses in financial statements
At each reporting date, the Group recognises the movement in the loss allowance as an impairment gain or loss in the
statement of profit or loss and other comprehensive income.
The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that asset.
Provisions
(i)
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
(j)
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.
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
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
30
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
ordinary shares, by the weighted average number of ordinary shares and dilutive potential ordinary shares adjusted for any bonus
issue.
Inventories
(k)
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.
Revenue and Other Income
(l)
The Group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018.
Under AASB 15, revenues are generated by the Group through the design, development, manufacture and distribution of improved
vehicle braking systems based on the Group’s patented technology to customers worldwide.
For sales of products, revenue is recognised when control of the products has transferred to the customer, which is usually when the
products are delivered to the customers. Volume discounts could be provided with the sale of these items depending on the volume
of aggregate sales made to eligible customers. Revenue from the rendering of services is recognised upon the delivery of the service
to the customer. A receivable will be recognised when the goods or services are delivered. The Group’s right to consideration is
deemed unconditional at this time as only the passage of time is required before payment of that consideration is due. There is no
financing component because sales are made within standard credit terms as agreed with the customers.
Other Revenue
Interest revenue is recognised using the effective interest rate method.
Dividend revenue is recognised when the right to receive a dividend has been established.
(m) Government Grants
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 and are recognised on an accruals basis.
Intangibles Other than Goodwill
(n)
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 in prior years, based on the extended patents, which currently run through to December 2030.
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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
31
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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.
(o)
Leases
Prior to 1 July 2019
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.
Post 1 July 2019
Refer to the new accounting policy adopted from 1 July 2019 discussed in Note 1(a).
Property, Plant and Equipment
(p)
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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
32
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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.
(q)
Employee Benefits
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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
33
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Comparative Figures
(r)
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
(s)
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.
Fair Value of Assets and Liabilities
(t)
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.
Critical Accounting Judgements, Estimates and Judgments
(u)
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.
Coronavirus (COVID-19) pandemic
Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the
company based on known information. This consideration extends to the nature of the products and services offered, customers,
supply chain, staffing and geographic regions in which the company operates. Other than as addressed in specific notes, there does
not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to
events or conditions which may impact the Company unfavourably as at the reporting date or subsequently as a result of the
Coronavirus (COVID-19) pandemic.
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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
34
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Key Estimates - Share based payment transactions
The fair value of any options issued as remuneration is measured using the Black-Scholes model. Measurement inputs include share
price on measurement date, exercise price of the instrument, expected volatility (based on historic volatility adjusted for changes
expected due to publicly available information, if any), weighted average expected life of the instruments (based on historical
experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds).
Key Estimates - Recoverability of Intangible Assets (Development Expenditure)
The recoverability of capitalised development expenditure recognised as a non-current asset is dependent upon the successful
commercialisation, or alternatively sale, of the respective intellectual property which comprise the assets.
New Standards and Interpretations not yet adopted
(v)
A number of new accounting standards, amendments to standards and interpretations are not yet effective for 30 June 2020
reporting period and have not been early adopted in preparing these financial statements.
The directors' assessment of these new accounting standards (to the extent relevant to the Group) and interpretations is that they
are not expected to have a material effect on the financial statements of the Group.
(w) Going Concern Basis of Preparation
The financial report has been prepared on the going concern basis that contemplates the continuity of normal business activities and
the realization of assets and extinguishment of liabilities in the ordinary course of business. For the year ended 30 June 2020, the
Group recorded a profit after tax of $0.171m (2019: Loss of $1.713m) and reported operating cash inflows of $0.222m (2019:
outflows $1.451m). At balance date and as detailed in Note 17, the Company has current borrowings of $0.055m (FY19: $2.129m).
The ability of the Company to continue as a going concern is dependent on it being able successfully raise further funding or generate
adequate cashflows from its operations or a combination of both. The Directors believe that the going concern basis is appropriate,
primarily based on current working capital available combined with budgeted cashflows expected to be generated from trading
operations over the next 12 months.
The Directors believe that as at the date of signing the financial statements, there are reasonable grounds to believe that, having
regards to the matters set out above, the Group will be able to continue to operate as a going concern and to meet its obligations as
and when they fall due, for at least the next 12 months.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
35
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
2
REVENUES FROM OTHER ACTIVITIES
Other activities
- interest received
- net foreign exchange (loss) / gain
- profit from sale of fixed assets
- R&D Tax Incentive
- other Government Grants related to the coronavirus (COVID-19)
- 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
-right of use assets
Total depreciation
Bad and doubtful debts
- trade debtors
Total bad and doubtful debts
Inventory obsolescence expense
CONSOLIDATED GROUP
2019
$’000
2020
$’000
3
(7)
14
609
110
1
730
1
(19)
-
600
-
1
583
4,482
4,006
295
90
17
18
9
6
66
206
10
10
1
361
85
35
18
9
12
-
159
4
4
143
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
36
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
4.
INCOME TAX EXPENSE
Note
a.
b.
c.
d.
The components of tax expense comprise:
Current tax
Deferred tax
Income tax
The prima facie tax benefit on profit / (loss) from ordinary activities
before income tax is reconciled to the income tax as follows:
Prima facie tax benefit on profit / (loss) from ordinary activities before
income tax at 27.5% (2019: 27.5%)
Add tax effect of:
- Non-allowable items
- Revenue losses and other deferred tax balances not recognised
- Recoupment of prior year losses not previously recognised
- R&D tax incentive
- Other non-assessable items
Income tax
Deferred tax recognised at 26% (2019:27.5%):
Deferred tax liabilities:
Prepayments
Intellectual Property
Deferred tax assets:
Carry forward revenue losses
Net deferred tax
Unrecognised deferred tax assets at 26% (2019:27.5%):
Carry forward revenue losses
Carry forward capital losses
Capital raising costs
Provisions and accruals
Leases
Intangible assets
Other
4e
4e
CONSOLIDATED GROUP
2019
$’000
2020
$’000
-
-
-
-
-
-
47
(471)
379
154
(391)
(168)
(21)
-
(6)
(42)
48
-
5,149
79
40
118
6
2
5
5,399
437
199
-
(165)
-
-
(6)
(7)
13
-
5,672
83
61
123
-
-
1
5,940
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;
the company continues to comply with the conditions for deductibility imposed by law; and
no changes in income tax legislation adversely affect the company in utilising the benefits.
(b)
(c)
Corporate Tax Rate:
e.
The corporate tax rate for eligible companies will reduce from 30% to 25% by 30 June 2022 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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
37
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 2020.
The totals of remuneration paid to KMP’s 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
2020
$000
1,031
91
-
105
2019
$000
1,059
87
-
-
1,227
1,146
Short-term employee benefits
These amounts include fees and benefits paid to the Non-Executive Chairman and Non-Executive Directors as well as all
salary, paid leave benefits, fringe benefits and cash bonuses awarded to Executive Directors and other KMP.
Post-employment benefits
These amounts are the superannuation contributions made during the year.
6.
AUDITOR’S REMUNERATION
Remuneration of the auditor of the Consolidated Group for:
Auditing the financial statements
Other services
7.
EARNINGS PER SHARE
Basic Earnings per share
Net profit / (loss) ($’000’s)
Weighted average number of ordinary shares
during the year used in calculation of basic EPS (in ‘000’s)
Basic profit / (loss) per share (cents)
CONSOLIDATED GROUP
2020
$’000
43
12
55
$’000
171
Number
(‘000’s)
2019
$’000
48
11
59
$’000
(1,713)
Number
(‘000’s)
349,097
282,474
Cents
0.05
Cents
(0.61)
A diluted earnings per share has not been shown for either 2020 or 2019 as it would dilute the actual profit or loss per share
attributable to existing Shareholders.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
38
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
CONSOLIDATED GROUP
2020
$’000
516
2019
$’000
716
8 CASH AND CASH EQUIVALENTS
Cash at bank
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
516
716
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 2020, the borrowing facility available was $500,000 (2019: $500,000) and the amount borrowed was nil (2019:
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
Note
CONSOLIDATED GROUP
Current
Trade receivables
Provision for impairment
Total current trade and other receivables
9a(i)
2020
$’000
1,295
(20)
1,275
2019
$’000
1,305
(10)
1,295
The following table shows the movement in lifetime expected credit loss that has been recognised for trade and other
receivables in accordance with the simplified approach set out in AASB 9: Financial Instruments.
Note
CONSOLIDATED GROUP
Net
measure-
ment of
loss
allowance
Adjust-
ment for
AASB 9
Opening
balance
under
AASB 139
1 July 2018
Amounts
written off
Closing
balance
30 June 2019
$000
$000
$000
$000
$000
a.
Lifetime Expected Credit Loss: Credit Impaired
(i)
Current trade receivables
(20)
(20)
-
-
-
-
10
10
(10)
(10)
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
39
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Note
CONSOLIDATED GROUP
9 TRADE AND OTHER RECEIVABLES
(Continued)
(i)
Current trade receivables
Opening
balance under
AASB 139
Adjust-
ment for
AASB 9
1 July 2019
Net
measure-
ment of loss
allowance
Amounts
written
off
Closing
balance
30 June 2020
$000
(10)
(10)
$000
$000
$000
-
-
(10)
(10)
-
-
$000
(20)
(20)
The Group applies the simplified approach to providing for expected credit losses prescribed by AASB 9, which permits
the use of the lifetime expected loss provision for all trade receivables. To measure the expected credit losses, trade
receivables have been grouped based on shared credit risk characteristics and the days past due. The loss allowance
provision as at 30 June 2020 is determined as follows:
-
-
the expected credit losses also incorporate forward-looking information.
The amounts written off are all due to customers declaring bankruptcy, or term receivables that have now
become unrecoverable.
2020
Expected loss rate
Gross carrying amount
Loss allowing provision
2019
Expected loss rate
Gross carrying amount
Loss allowing provision
Current
>30 days
past due
>60 days
past due
>90 days
past due
$000
$000
$000
$000
0%
1,116
-
0%
149
-
68%
30
(20)
0%
-
-
Current
>30 days
past due
>60 days
past due
>90 days
past due
$000
$000
$000
$000
0%
787
-
0%
435
-
12%
84
(10)
0%
(1)
-
Total
$000
1.5%
1,295
(20)
Total
$000
0.8%
1,305
(10)
10
INVENTORIES
CONSOLIDATED GROUP
Current
Finished goods
Components and WIP
Less: Provision for obsolescence
11
OTHER CURRENT ASSETS
Prepayments
Other receivables - R&D Tax incentive
2020
$’000
-
2,085
(84)
2,001
194
520
714
2019
$’000
-
1,939
(103)
1,836
77
600
677
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
40
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
12. CONTROLLED ENTITES
Advanced Braking Pty Ltd ACN 088 129 917 (Incorporated in WA)
Class and number of shares: ordinary
2020
Number
200,002
PARENT ENTITY
2019
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.
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
2020
$’000
620
(457)
163
75
(51)
24
91
(26)
65
151
(112)
39
120
(119)
1
292
2019
$’000
607
(367)
240
181
(83)
98
88
(17)
71
140
(93)
47
120
(113)
7
463
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
41
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
13
PROPERTY, PLANT AND EQUIPMENT (continued)
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
2020
$'000
$'000
$'000
Balance at the beginning of year
Additions
Disposals
Written-off
Depreciation expense
240
13
-
-
(90)
98
-
(57)
-
(17)
Carrying amount at the end of year
163
24
47
10
-
-
(18)
39
$'000
71
3
-
-
$'000
$'000
7
-
-
-
463
26
(57)
-
(9)
(6)
(140)
65
1
292
2019
$'000 $'000
$'000
$'000
$'000
$'000
Balance at the beginning of year
Additions
Disposals
Written-off
207
118
-
-
133
-
-
-
Depreciation expense
(85)
(35)
Carrying amount at the end of year
240
98
51
14
-
-
(18)
47
80
19
-
-
-
-
-
-
490
132
-
-
(9)
(12)
(159)
71
7
463
14. RIGHT-OF-USE ASSETS
The Group's lease portfolio currently includes buildings. This lease runs for a period of 5 years with an option
to renew for a further 5-year period after that period. The extension option which management were
reasonably certain to be exercised have been included in the calculation of the lease liability. Previously, this
lease was classified as an operating lease under AASB 17.
The Group has elected not to recognise right-of-use assets for low value items and any short-term leases.
CONSOLIDATED GROUP
(i) AASB 16 related amounts recognised in the balance sheet
Right-of-use assets
Leased building
Accumulated depreciation
Recognised on initial application of AASB 16 (previously classified as
operating leases under AASB 117)
Depreciation expense for the year ended
2020
$’000
553
(66)
487
66
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
42
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
14. RIGHT-OF-USE ASSETS (continued)
CONSOLIDATED GROUP
(ii) AASB 16 related amounts recognised in the statement of profit or loss
Depreciation charge related to right-of-use assets
Interest expense on lease liabilities (under finance cost)
Short-term leases expense
Low-value asset leases expense
Variable lease payment expense
(iii) Total cash outflows for leases
- Financing cash outflow (principal repaid)
- Operating cash outflow (finance costs)
15.
INTANGIBLES
Wet Brake technology assigned from
Safe Effect Technologies International Ltd
Less - Accumulated amortisation
Carrying amount at the end of year
2020
$’000
66
43
-
14
-
2020
$’000
92
43
2019
$’000
-
-
CONSOLIDATED GROUP
2019
$’000
2020
$’000
2,984
(2,313)
671
2,984
(2,249)
735
Total carrying amount at the end of year
671
735
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
2020
Balance at the beginning of year
Amortisation expense
Carrying amount at the end of year
Wet Brake Technology
$'000
735
(64)
671
Total
$'000
735
(64)
671
2019
Balance at the beginning of year
Amortisation expense
Carrying amount at the end of year
$'000
799
(64)
735
$'000
799
(64)
735
Impairment Disclosure
An impairment assessment of intangibles was performed in April 2017, triggered by the impending introduction of the new
polymer Terra Durra brake. This assessment confirmed the carrying amount of the SIBS (Failsafe) Wet Brake Intellectual
Property and extended the amortisation period to December 2030 to coincide with the expiry date of the existing patents.
No impairment assessment of intangibles was performed 2020 or 2019, as there were no impairment triggers.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
43
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
16
TRADE AND OTHER PAYABLES
Current (unsecured)
Trade creditors
Other payables
Accrued expenses
17
(a)
INTEREST BEARING LIABILITIES
Current
R&D incentive prepayment loan (i)
Other (secured)
Lease liability – Right-of-use assets
Convertible Notes (ii)
Interest due on Convertible note
Total
CONSOLIDATED GROUP
2019
$’000
1,069
63
163
2020
$’000
771
283
111
1,165
1,295
-
7
7
48
-
-
-
55
420
17
437
-
1,632
60
1,692
2,129
(i)
The R&D incentive prepayment loan provided the Company with of $420,000 in April 2019 and a further $200,000 in
September 2019 from the forecast research and development tax incentive offset for the year ended 30 June 2019.
The lender is R&D Capital Partners Pty Limited and the loan annual interest rate was 15%. During December 2019,
the Company repaid the R&D prepayment loan facility of $620,000 to R&D Capital Partners Pty Ltd, following the
receipt of the ATO R&D tax incentive refund of approximately $689,000.
(ii) During November and December 2019, the Company converted convertible notes with a face value of $1,624,867
into 81,243,334 shares at $0.02 per share. A note holder elected to redeem convertible notes to the value of $6,833,
which was paid on 11 December 2019. The convertible notes had a coupon rate of 15% pa and $61,692 was paid to
convertible note holders in the year ended 30 June 2020.
(b) Non-current
Other
Lease Liability – Right of use asset (c)
Total
CONSOLIDATED GROUP
2019
$’000
59
2020
$’000
16
456
472
-
59
(c)
Lease Liability – Right of use asset
The measurement principles of AASB 16 are only applied from 1 July 2019. At the date of initial application, the right-of-use
assets equals to the lease liabilities and there was no adjustment to the retained earnings. The lease liabilities are presented
below:
Operating lease commitments disclosed at 30 June 2019
Changes to extension options assumptions & discounting using incremental
borrowing rate at date of initial application
Balance at 1 July 2019
Payments
Interest charges during the period
Balance at 30 June 2020
322
231
553
(92)
43
504
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
-
-
-
-
-
-
44
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
18
PROVISIONS
Current
Warranties
Employee entitlements
Total
Non-Current
Employee Entitlements
Total
(b) Number of Employees
Number of employees at year-end
Australia
Total
19
ISSUED CAPITAL
(a) Ordinary Shares
CONSOLIDATED GROUP
2019
$’000
68
133
2020
$’000
82
175
257
201
14
14
4
4
Number
Number
18
18
16
16
The Parent Entity had issued 379,148,766 (2019: 297,049,796) fully paid ordinary shares as at the 30 June 2020.
2020
Number of
shares
$’000
2019
Number of
shares
$’000
Ordinary shares
Balance at beginning of the financial year 1 July
31 August 2018 – Institutional Entitlement Offer
12 September 2018 – Retail Entitlement Offer
17 September 2018 – Entitlement Offer shortfall
2 October 2018 – Convertible Notes converted to shares
12 December 2018 – Share Consolidation 10:1 basis
24 July 2019 – Issue of shares to a consultant
24 July 2019 – Issue of shares to a consultant
24 July 2019 – Issue of shares to a consultant
23 October 2019 – Convertible Notes converted to shares
29 October 2019 – Convertible Notes converted to shares
11 November 2019 – Convertible Notes converted to shares
14 November 2019 – Convertible Notes converted to shares
09 December 2019 – Convertible Notes converted to shares
Transaction costs relating to share issues
Balance at end of financial year
297,049,796
54,200
150,754
184,049
520,833
500,000
950,000
72,541,668
1,500,000
5,751,666
379,148,766
379,148,766
3
3
5
10
19
1,451
30
115
55,836
(17)
55,819
2,224,120,936 52,805
439
841
203
10
219,720,665
420,427,270
101,226,319
5,000,000
(2,673,445,394)
297,049,796 54,298
(98)
297,049,796 54,200
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
45
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
(b)
Options
Unlisted Options
Balance at beginning of the financial year 1 July 2019
24 July 2019 – Issue of unlisted options to a consultant
26 February 2020 – Issue of KMP Options
Balance at end of financial year 30 June 2020
(i) Weighted Average exercise price
(c) Capital Management
Number of
options
Exercise
price
$
Expiry date
-
5,000,000
23,832,435
28,832,435
0.025
0.040
0.037
30 June 2022
30 June 2023
WAEP (i)
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 $500,000 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.
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 2020 and 30 June 2019 are as below.
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.
Gearing ratio
CONSOLIDATED GROUP
2019
42.0%
2020
0.3%
As the Group’s gearing ratio has dropped significantly in 2020 due to the extinguishment of the majority of the Group’s
debt, the Group’s capital risk management focus has become the management of its current working capital position to
meet anticipated operating requirements.
The working capital positions of the Group at 30 June 2020 and 30 June 2019 were as follows:
Cash and cash equivalents
Trade and other receivables
Other current assets
Trade and other payables
Current liabilities
Current provisions
Working Capital Position as at 30 June
CONSOLIDATED GROUP
2019
$’000
716
1,295
677
(1,295)
(2,129)
(201)
(937)
2020
$’000
516
1,275
714
(1,165)
(55)
(257)
1,028
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
46
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
20 RESERVES
Option reserve
Share based payment reserve
Total reserves at the end of the financial year
21 ACCUMULATED LOSSES
Accumulated losses at the beginning of the financial year
Net profit / (loss) attributable to members of the parent entity
Accumulated losses at the end of the financial year
22
SHARE-BASED PAYMENTS
(a) Share-based payment expense
Shares
Schedule of share-based payments
(i)
24 July 2019 – Issue of 150,754 shares to a consultant
24 July 2019 – Issue of 184,049 shares to a consultant
24 July 2019 – Issue of 520,833 shares to a consultant
Total allocated to Issued Capital
Options
(ii)
24 July 2019 – Issue of 5,000,000 unlisted options to a consultant
Total allocated to Issued Capital
26 February 2020 – Issue of 23,832,435 unlisted options to KMP
Total allocated to Share-based Payment Reserve
CONSOLIDATED GROUP
2019
$’000
-
-
-
2020
$’000
64
105
169
CONSOLIDATED GROUP
2019
$’000
(50,453)
(1,713)
(52,166)
2020
$’000
(52,166)
171
(51,995)
CONSOLIDATED GROUP
2019
$’000
-
2020
$’000
180
3
3
5
11
64
64
105
105
-
-
-
-
-
-
-
-
(b) Options issued during the period
1. On 24 July 2019, the Company issued 5,000,000 unlisted options with an exercise of $0.025 and an expiry date of 30
June 2020 to a consultant, K S Capital Pty Limited under an agreement to provide corporate advisory services dated
7 May 2019.
2. On 27 November 2019, the Company received shareholder approval for the adoption of a new Share Option Plan
and key management personnel were granted and issued a total of 23,832,435 unlisted options which have an
exercise price of $0.04 per share and an expiry date of 30 June 2023, subject to vesting conditions (KMP Options).
The KMP Options were issued on 26 February 2020 and are subject to the following vesting conditions:
• Ongoing employment; and
• Vesting in 3 tranches over a 3-year period, as below.
KMP Options Vesting 1 year
from issue date (T1)
25%
KMP Options Vesting 2
years from issue date (T2)
25%
KMP Options Vesting 3
years from issue date (T3)
50%
5,958,108
5,958,108
11,916,219
Total
23,832,435
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
47
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
(c) Unlisted options valuation
The fair value of the equity settled share options granted during the period are estimated at the date of grant using a
Black-Scholes model taking into account the terms and conditions upon which the options were granted. The following
table lists the inputs to the model used for the year ended 30 June 2020
Consultant
Options
KMP Options
Tranche 1
KMP Options
Tranche 2
KMP Options
Tranche 3
Fair value at grant date
Share price at grant date
Exercise price
Expected volatility
Expected life
Expected dividends
Risk-free interest rate
Number of options issued
Valuation
$0.0127
$0.02
$0.025
113%
2.94 years
Nil
0.89%
5,000,000
$63,523
$0.0103
$0.03
$0.04
111%
1 year
Nil
0.75%
5,958,108
$61,287
$0.03
$0.04
111%
2 years
Nil
0.68%
5,958,108
$90,884
$0.03
$0.04
111%
3 years
Nil
0.65%
11,916,219
$220,989
The total value of the Consultant Options was $63,523 at the date they were granted and vested immediately.
The total value of the KMP Options is $373,159 at the date they were granted. The KMP Options are subject to vesting
conditions:
•
•
ongoing service and
vest in three tranches at 1, 2 and 3 years from the date of issue.
The KMP Option valuations are amortised over the period of vesting for each tranche, as follows:
KMP Options
Tranche 1
Tranche 2
Tranche 3
Total
FY2020
$35,737
$26,570
$43,110
$105,416
FY2021
$25,550
$45,318
$73,529
$144,396
FY2022
-
$18,996
$73,529
$92,525
FY2023
-
-
$30,822
$30,822
Total
$61,287
$90,884
$220,989
$373,159
23 CONTRACT AND LEASING COMMITMENTS
(a)
Finance lease commitments
Payable
- not later than 1 year
- later than 1 year but not later than 5 years
Less future finance charges
CONSOLIDATED GROUP
2019
$’000
20
63
83
(7)
76
2020
$’000
-
-
-
-
-
(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
-
-
-
105
217
322
The liabilities associated with leases now form part of the borrowings disclosure at Note 17.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
48
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
24 SEGMENT REPORTING
The Consolidated Group’s principal activities are research and development, commercialisation and manufacture of
Failsafe wet sealed braking systems and the Terra Dura dry sealed 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.
(a) Revenue by geographical region
Revenue attributable to external customers is disclosed below based on the location of the external customer.
Australia
Oversea / Export
Total revenue from trading activities
(b) Assets by geographical region
The location of segment assets by geographical location of the assets is disclosed below:
Australia
Total assets
(c) Major customers
CONSOLIDATED GROUP
2019
$’000
5,011
1,836
6,847
2020
$’000
5,684
2,665
8,349
5,956
5,956
5,722
5,722
The Group has a number of customers to whom it provides both products and services. The three most significant
customers comprise:
Significance
1st
2nd
3rd
2020
% of total revenue
from trading activities
7.6%
7.1%
6.9%
2019
% of total revenue from
trading activities
17.8%
8.2%
6.9%
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
49
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
25
(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
Share-based payment expense
Non-cash flows in loss from ordinary activities
Depreciation and impairment
Amortisation of IP
Other
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
(b)
Non-cash financing and investing activities
2020
During the year to 30 June 2020,
a) On 24 July 2019, the Company issued:
CONSOLIDATED GROUP
2019
$’000
2020
$’000
171
(14)
180
206
64
(66)
20
(165)
(117)
(123)
66
222
(1,713)
-
-
159
64
-
49
(307)
228
101
(32)
(1,451)
a. 855,636 ordinary shares to a consultant, K S Capital Pty Limited, in lieu of $11,000 in fees for services
under an agreement to provide corporate advisory services to ABT dated 7 May 2019.
b. 5,000,000 unlisted options with an exercise of $0.025 and an expiry date of 30 June 2022 to a consultant,
K S Capital Pty Limited under an agreement to provide corporate advisory services dated 7 May 2019.
b) During November and December 2019, the Company converted convertible notes with a face value of
$1,624,867 into 81,243,334 ordinary shares at $0.02 per share.
c) On 27 November 2019, the Company received shareholder approval for the adoption of a new Share Option
Plan and key management personnel were granted and issued a total of 23,832,435 unlisted options which
have an exercise price of $0.04 per share and an expiry date of 30 June 2023, subject to vesting conditions
(KMP Options).
2019
During the year to 30 June 2019,
a) nil ordinary shares were issued to Directors and Key Management Personnel.
b) 5,000,000 ordinary shares were issued to a convertible note holder on conversion of $10,000 of convertible
notes.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
50
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
26
(a)
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.
(b)
Transactions with Directors and Key Management Personnel
(i)
(ii)
(iii)
(iv)
(v)
During December 2018, Director, David Slack, made a $500,000 loan facility (related party loan facility) available
to the Company via DASI Investments Pty Ltd, an entity of which Mr Slack is a director and shareholder At a
General Meeting of the Company on 12 June 2019, shareholders gave approval for the related party loan facility
to be converted to a convertible note on the same terms as the New Convertible Notes. The convertible note was
held in the name of DASI Investments Pty Ltd. On 11 November 2019, 25,000,000 ordinary shares were issued
on conversion of the $500,000 convertible note at $0.02 per share to DASI Investments Pty Ltd. During the year
ended 30 June 2020, DASI Investments Pty Ltd received loan interest payments in the amount of $56,301.37.
During the reporting period the Company made payments of $1,438 to Rockwell Bates Pty Ltd T/A R. B. Flinders
for legal services on an arms-length basis at commercial rates. The Company also made payments of $2,400 for
director expense reimbursement to Rockwell Bates Pty Ltd T/A R. B. Flinders. R. B. Flinders is a related party of
Director, Adam Levine of which he is a director and shareholder.
During the reporting period the Company made payments totalling $40,150 to Rockwell Group Holdings Pty Ltd
for director’s fees for Adam Levine and $2,363 for director expense reimbursement. Rockwell Group Holdings Pty
Ltd is a related party of Director, Adam Levine of which he is a director and shareholder.
During the reporting period the Company made payments totalling $53,355 to AE Administrative Services Pty Ltd
for company secretarial, accounting and administration services on an arms-length basis at commercial rates. AE
Administrative Services Pty Ltd is a related party of Director, Mark Lindh of which he is a director.
During the reporting period the Company made payments totalling $3,313 to Adelaide Equity Partners Limited
for director and company secretary expense reimbursement. Adelaide Equity Partners Limited is a related party
of Director, Mark Lindh of which he is a director.
(vi)
During 2020, no securities were issued to directors as remuneration.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
51
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
27
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Overview
The Company and its Subsidiary (“Group”) have exposure to the risks below from financial instruments:
i) Market risk;
Liquidity risk;
ii)
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:
2020
Financial assets
Cash
Receivables - current
Other receivables (note 11)
R&D Tax incentive
Total financial assets
Financial liabilities
Payables
Interest Payable
R&D rebate loan
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
0.15%
-
-
-
-
15.0%
7.89%
15.0%
516
-
-
516
-
-
-
-
-
-
-
-
-
-
-
-
-
55
-
55
-
-
-
-
-
-
-
472
-
472
-
1,275
520
1,795
1,165
-
-
-
-
1,165
Total
$’000
516
1,275
520
2,311
1,165
-
-
527
-
1,692
Net Financial Assets / (Liabilities)
516
(55)
(472)
630
619
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
52
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Interest rate risk (continued)
2019
Financial assets
Cash
Receivables - current
Other receivables (note 11)
R&D Tax incentive
Total financial assets
Financial liabilities
Payables
Interest Payable
R&D rebate loan
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
0.18%
-
-
-
-
15.0%
5.4%
15.0%
716
-
-
716
-
-
-
-
-
-
-
-
-
-
-
-
420
17
1,632
2,069
-
-
-
-
-
-
-
59
-
59
-
1,295
600
1,895
1,295
60
-
-
-
1,355
Total
$’000
716
1,295
600
2,611
1,295
60
420
76
1,632
3,483
(872)
Net Financial Assets / (Liabilities)
As at 30 June 2020 Advanced Braking Pty Ltd was entitled to interest on deposits at the National Australia Bank at rates
at the weighted average of 0.15% per annum (2019: 0.18% per annum).
The sensitivity analysis below is based on the interest rate risk exposure in existence at the balance sheet date. The 0.50%
(2019: 0.50%) 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.
(2,069)
716
(59)
540
Possible movements before tax:
+0.5% (2019: 0.5%) per annum
-0.5% (2019: -0.5%) per annum
Net financial (liabilities)/assets as above
Non-financial assets and liabilities
-Inventories
-Property, plant & equipment
-Right-of-use assets
-Intangible Assets
-Other current assets-prepayments (note 11)
-Refundable deposits
-Provisions - Current
-Provisions - Non-current
Net (liabilities)/assets as per the Balance Sheet
CONSOLIDATED GROUP
2019
2020
$’000
$’000
3
(3)
4
(4)
CONSOLIDATED GROUP
2019
2020
$’000
619
2,001
292
487
671
194
-
(257)
(14)
3,993
$’000
(872)
1,836
463
-
735
77
-
(201)
(4)
2,034
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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
53
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
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 2020, the Company does not have any forward foreign exchange contracts in place. As at 30 June 2020 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
2019
2020
$’000
$’000
-
-
223
-
-
-
(14)
(14)
(11)
212
The following sensitivity analysis is based on the foreign currency risk exposure in existence at the balance sheet date.
The 7% (2019: 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 2020, 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% (2019: +7%) per annum
-7% (2019: -7%) per annum
CONSOLIDATED GROUP
2019
2020
$’000
$’000
(1)
1
15
(15)
(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
2019
$’000
2020
$’000
The following are the contractual maturities of financial liabilities, including estimated interest payments:
0 – 6 months
6 – 12 months
1 – 5 years
Potential payment to be made for Convertible Notes redeemed by holders.
Refer to note 16(a).
27
28
472
527
-
527
492
8
56
556
1,632
2,188
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
54
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
The following table discloses maturity analysis of financial assets and liabilities based on management expectation:
CONSOLIDATED GROUP AS AT 30 JUNE 2020
< 6 Mths
$'000
6 - 12 Mths
$'000
1 - 5 Years
$'000
Financial Assets
Cash and cash equivalents
Trade and other receivables
Accrued Income
R&D tax incentive
Total financial assets
Financial Liabilities
Payables
Lease liabilities
R&D rebate loan
Convertible Note accrued interest
Convertible notes
Total financial liabilities
Net exposure
516
1,275
520
2,311
1,165
27
-
-
-
1,192
1,119
-
-
-
-
-
28
-
-
-
28
-
-
-
-
-
472
-
-
-
472
(28)
(472)
CONSOLIDATED GROUP AS AT 30 JUNE 2019
< 6 Mths
$'000
6 - 12 Mths
$'000
1 - 5 Years
$'000
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
R&D rebate loan
Convertible Note accrued interest
Convertible notes
Total financial liabilities
Net exposure
716
1,295
600
2,611
1,295
12
420
60
1,632
3,419
(808)
-
-
-
-
-
8
-
-
-
8
-
-
-
-
-
56
-
-
-
56
(8)
(56)
(872)
Total
$'000
516
1,275
520
2,311
1,165
527
-
-
-
1,692
619
Total
$'000
716
1,295
600
2,611
1,295
76
420
60
1,632
3,483
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
55
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
(c)
Credit risk
The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties
other than those receivables specifically provided for and mentioned within Note 9. The class of assets described as "trade
and other receivables" is considered to be the main source of credit risk related to the Group.
On a geographical basis, the Group has significant credit risk exposures in Australia given the substantial
operations in that region. The Group’s exposure to credit risk for receivables at the end of the reporting period
in that regions is as follows:
AUD
Australia
CONSOLIDATED GROUP
2020
$’000
1,275
1,275
2019
$’000
1,295
1,295
There has been no change in the estimation techniques used or significant assumptions made during the current reporting
period.
The Group writes off a trade receivable when there is information indicating that the debtor is in severe financial difficulty
and there is no realistic prospect of recovery; for example, when the debtor has been placed under liquidation or has entered
into bankruptcy proceedings, or when the trade receivables are over two years past due, whichever occurs earlier. None of
the trade receivables that have been written off are subject to enforcement activities.
(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 2020 resulted
in no adjustment to the provision for obsolete inventory.
Intangible assets as at 30 June 2020 only comprises the Wet Brake technology assigned from Safe Effect Technologies
International Ltd on 27 June 2006. The amortisation period is to December 2030, being the current life of patents, which
underpin the carrying value.
28
CONTINGENT LIABILITIES
There are no contingent liabilities.
29
EVENTS SUBSEQUENT TO BALANCE DATE
The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially positive for the company
up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The
situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries,
such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be
provided.
On 17 September 2020, ABT received $534,000 as a refundable tax offset for eligible research and development expenditure
relating to the development of its innovative braking solutions during FY20, following the lodgement of the Company’s FY20
income tax return.
No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the
company's operations, the results of those operations, or the company's state of affairs in future financial years.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
56
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
30
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
Non-current assets
TOTAL ASSETS
LIABILITIES
Current liabilities
Non-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)
PARENT ENTITY
2019
$'000
2020
$'000
7
7,338
7,345
63
-
63
249
7,560
7,809
1,811
-
1,811
55,819
169
(48,706)
7,282
54,200
-
(48,202)
5,998
PARENT ENTITY
2019
$'000
(687)
(687)
2020
$'000
(504)
(504)
Guarantees
At 30 June 2020, Advanced Braking Technology Ltd provides 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, the R&D rebate loan 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 2020, Advanced Braking Technology Ltd had not entered into any contractual commitments for the
acquisition of property, plant and equipment (2019: Nil).
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
57
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1. The financial statements and notes, as set out on pages 24 to 54, 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 2020 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:
Dagmar Parsons
Chairman
Sydney, New South Wales
30 September 2020
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
58
Moore Australia Audit (WA)
Level 15, Exchange Tower,
2 The Esplanade, Perth, WA 6000
PO Box 5785, St Georges Terrace, WA 6831
T +61 8 9225 5355
F +61 8 9225 6181
www.moore-australia.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ADVANCED BRAKING TECHNOLOGY LIMITED
REPORT ON THE AUDIT OF THE FINANCIAL REPORT
Opinion
We have audited the financial report of Advanced Braking Technology Limited (the Company) and its
subsidiary (the “Group”), which comprises the consolidated statement of financial position as at
30 June 2020, 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. giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
ii. 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.
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.
Moore Australia Audit (WA) – ABN 16 874 357 907.
An independent member of Moore Global Network Limited - members in principal cities throughout the world.
Liability limited by a scheme approved under Professional Standards Legislation
59
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF ADVANCED BRAKING TECHNOLOGY LIMITED (CONTINUED)
Key Audit Matters (continued)
Valuation of Failsafe (WET) Brake Technology
Refer to Notes 1(n) & 15 Intangibles
The carrying value of Advanced Braking’s Failsafe
Brake Technology as at 30 June 2020 was
$671,000 and the related amortisation charge
for the year ended 30 June 2020 was $64,000.
The carrying value and amortisation rate are
reviewed annually by management with
reference to current and forecast trading
performance, relevant technological factors and
other operational indicators. 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:
• Assessed the reasonableness of management’s
assertions and estimates regarding estimated
useful life of the asset with reference to its patent
information currently registered with local and
foreign intellectual property government agencies.
• Held discussions with management that the
amortisation period (useful life) at the end of the
financial year remained appropriate and that there
were no conditions which would adversely affect
the valuation of the intangibles
• Assessment of any
impairment
the market capitalisation of
triggers by
the
comparing
Company against the carrying value of its total net
assets at balance date. The year-end market
capitalisation of $9.1 million far exceeded the net
asset value. There were no other impairment
triggers based on the Group’s improved financial
performance and position during the year and its
future budgeted performance.
• Tested the amortisation expense recorded and
ensured consistency with the accounting policy.
• Considered whether the relevant disclosures in the
statements were appropriate and
financial
adequate.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
60
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 2020
was $2 million. Inventory comprises finished goods
and components.
Inventories are held in significant quantities and are
valued at the lower of cost and net realisable value
(NRV).
Our procedures to test the existence and valuation
of inventories included, amongst others:
• Testing the relevant internal control procedures
relating to the existence and valuation of
inventory, including attendance at the physical
inventory count near period-end, undertaking
our own test counts and obtaining confirmation
of inventories held by third parties
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.
Given inventories are the Company’s single largest
asset, we have therefore
inventory
existence and valuation as a key audit matter.
identified
• 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.
• Held discussions with management
to
understand and
corroborate assumptions
applied in ensuring slow moving, old and certain
inventory lines have been appropriately valued
or adequately provided for or impaired
• 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
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
61
Key Matters (continued)
Valuation of Receivables
Refer to Note 9 Trade & Other Receivables
Valuation of receivables is a key audit matter.
It is due to the size of the account balances and the
judgements required in determining their carrying
value that this is a key area of audit focus.
Trade debtors amounted to $1.275 million as at 30
June 2020.
The Group assesses periodically and at each year
end the expected credit loss associated with its
receivables. When there is expected credit loss
impairment, the amount and timing of future cash
flows are estimated based on historical, current and
forward-looking loss experience for assets with
similar credit risk characteristics.
Our procedures included, amongst others:
• Review of the level of export trade credit
insurance
debtors,
for
subsequent receipt collections from debtors and
ageing analysis post year end.
relevant
cover
• Review of expected credit loss workings and
assessments prepared by management
in
including an
relation to trade receivables,
analysis of
the credit risk characteristics
attributed to significant trade debtors as part of
our assessment of the adequacy of impairment
provisions.
• Discussion with management and the directors
as to the existence of any arrears/disputes with
debtors and the impact these factors have had
on the assessment of impairment provisions
raised by management.
• Review of disclosures made in the notes to the
financial statements
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 2020, 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.
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
62
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.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf.
This description forms part of our audit report.
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 2020.
In our opinion, the Remuneration Report of Advanced Braking Technology Limited, for the year ended
30 June 2020 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.
SL TAN
PARTNER
MOORE AUSTRALIA AUDIT (WA)
CHARTERED ACCOUNTANTS
Signed at Perth on the 30th day of September 2020
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
63
SHAREHOLDER INFORMATION
Additional information required by the ASX Limited Listing Rules and not disclosed elsewhere in this
report is set out below.
1.
Statement of issued capital at 23 September 2020.
(a)
Distribution of fully paid ordinary shares
Size of Holding
1
1,001
5,001
10,001
100,001
Total
-
-
-
-
and
1,000
5,000
10,000
100,000
Over
Number of
Shareholders
Shares Held
% Units
227
310
185
574
300
1,596
135,982
869,160
1,442,769
22,999,152
353,701,703
379,148,766
0.04
0.23
0.38
6.07
93.28
100.00
(b)
(c)
There are 816 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 23 September 2020:
Mr Keith Knowles
Mr David Slack
Mr Craig Chapman
22.33% 84,648,105 ordinary shares
18.17% 68,878,164 ordinary shares
5.26% 19,961,975 ordinary shares
3.
Shareholders
The twenty largest Shareholders hold 61.81% of the total issued ordinary shares in the Company as at 23 September
2020.
4.
Share Options on issue at 23 September 2020
The Company has on issue:
• 5,000,000 unlisted options, exercisable at $0.025 on or before 30 June 2022, which are held by K. S. Capital Pty Ltd.
• 23,832,435 unlisted options, exercisable at $0.04 on or before 30 June 2023, which are held by Key Management
Personnel and subject to vesting conditions. Refer to Note 22 for more information.
5.
6.
On-market buy-back.
There is no current on-market buy-back.
Quotation
Ordinary shares in Advanced Braking Technology Ltd are listed on the Australian Securities Exchange (ASX:ABV).
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
64
SHAREHOLDER INFORMATION
8.
Largest Fully Paid Ordinary Shareholders
The names of the twenty largest Shareholders at 23 September 2020, who hold 61.81% of the fully paid ordinary shares in the
Company, are:
Rank Name
PARKS AUSTRALIA PTY LTD
MR KEITH KNOWLES
DASI INVESTMENTS PTY LTD
MR CRAIG GRAEME CHAPMAN
WINDPAC PTY LTD
WINDPAC PTY LTD
MR PETER RODNEY BOWER
RP INVEST PTY LTD
CHARMED5 PTY LTD
HIMSTEDT & CO PTY LTD
MR EVAN PHILIP CLUCAS + MS LEANNE JANE WESTON
SCINTILLA STRATEGIC INVESTMENTS LIMITED
MR DAVID EARL SLACK
MR KEITH KNOWLES
MR KYM FRAHN + MRS WENDY LEANNE FRAHN
TOKEN NOMINEES PTY LTD
ONKAPARINGA HOLDINGS PTY LTD
MYALL RESOURCES PTY LTD
M/S TRACEY-ANN PALMER
KIZOGO 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
49,784,173
35,861,787
26,523,588
19,961,975
19,622,167
18,981,633
11,000,000
8,600,000
6,500,000
5,000,000
4,606,250
4,500,000
4,041,864
3,813,967
3,398,504
2,533,334
2,500,000
2,450,000
2,414,490
2,276,741
% of
Issued
Shares
13.13
9.46
7.00
5.26
5.18
5.01
2.90
2.27
1.71
1.32
1.21
1.19
1.07
1.01
0.90
0.67
0.66
0.65
0.64
0.60
234,370,473
61.81
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
65
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ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020
66
ABN 66 099 107 623
19 Creative Street
Wangara, Western Australia 6065
ADVANCED BRAKING TECHNOLOGY LTD - ANNUAL REPORT 2020