×

EVENT -

Hardman & Co November Investor Forum – Registration open now

addvantage

Serving up major fuel savings for truckers

04 Jun 2019 / Tax enhanced research

Why invest

Positives

  • Strategy: addvantage has developed technology that, by optimising fuel use, can deliver diesel savings of up to 15%; it plans to sell its systems to the 4m Class 8 trucks in the US.

Issues

  • Early stage: whilst the technology has been under development for 15 years, addvantage is at an early stage in selling it. addvantage has very aggressive revenue growth expectations, which reflect the vast size of the US market.

The Management

Positives

  • Team: the team is led by Daniel Mitchell, a serial entrepreneur, who is also the majority shareholder in addvantage. Recent hires include individuals with decades of experience and deep knowledge of the US trucking sector.

Issues

  • Finance: a fundraise of up to £5m is already underway, which will enable addvantage to secure the working capital to sell its system to the US Class 8 trucking market. Assuming that decent revenue growth is achieved, addvantage should be very cash generative.

Nuts & bolts

  • With c$160bn of diesel sold annually in the US, much of it to Class 8 trucks, the opportunity is vast. Aggressive sales and marketing will be necessary to achieve revenue targets. Of the proven 15% fuel savings, clients generally retain c60% of these and addvantage the remaining 40%.

Specific Issues

  • Given the revenue growth projections, investing in addvantage is clearly high risk – but with high rewards if the very optimistic projections are met.
  • The ongoing up-to-£5m fundraise is based on a price of £1.50 per share; the previous fundraise took place at £1 per share.
  • EIS eligibility substantially mitigates the risks for investors: for higher rate taxpayers just 38.5p of every £1 invested is at risk.

Risks

  • Insufficient clients placing substantial orders for addvantage’s fuel-saving technology.
  • Delays from drawn-out trials.
  • Over-stretched management.
  • Cost over-runs, in the quest for revenues.
  • Delays in securing approvals from the Environmental Protection Agency (EPA).
  • Major changes in US fuel taxes.
Download the full report

Request a meeting

If you'd like to be introduced to the team at addvantage, get in touch.

Request a meeting