REG - AB Dynamics PLC - Acquisition of Venshure and Notice of Results

Ab DynamicsAnnouncement

03/04/2024 07:00

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RNS Number : 0599J  AB Dynamics PLC  03 April 2024

3 April 2024

AB Dynamics plc

("AB Dynamics", the "Company" or the "Group")

 

Acquisition of Venshure Test Services LLC and Notice of Interim Results

 

AB Dynamics (AIM: ABDP), the designer, manufacturer and supplier of advanced
testing, simulation and measurement products and services to the global
transport market, is pleased to announce the acquisition of Venshure Test
Services LLC (the "Acquisition" or "VTS"), and to provide notice of the
Group's Interim Results announcement.

Acquisition of VTS

VTS is a leading provider of dynamometer-based testing services to the
automotive sector in the USA, particularly focussed on the development and
deployment of electric vehicles (EV) for US based automotive OEMs.

Headquartered in Chelsea, Michigan, VTS offers a full range of testing
services including mileage accumulation and assessment of EV powertrain and
battery performance across a range of extreme climatic conditions.

The business comprises a 23,300ft(2) testing facility strategically located
close to the Detroit area and includes dynamometers and EV vehicle testing
laboratories. The vehicle testing laboratories provide standardised procedures
to validate EV battery energy consumption and range testing, producing SAE
J1634 quality data.

The Acquisition supports several of the Group's strategic priorities
including:

·      Further alignment of the Group's Testing Services operations to
the structural growth drivers in the automotive sector;

·      Expanding the Group's capabilities and broadening the scope of
services in the Testing Services area;

·      Complementing the Group's existing California-based track testing
services business with laboratory-based testing; and

·      Opportunity to replicate testing services capabilities across
both locations.

 

Financial considerations of the Acquisition

The maximum consideration payable for VTS is $30.0m (£23.6m), comprising an
initial cash consideration of $15.0m (£11.8m). The Acquisition has been
completed on a cash-free, debt-free basis with the initial cash consideration
funded from the Group's existing cash resources and short-term utilisation of
part of the Group's revolving credit facility. Contingent consideration of up
to $15.0m will be payable in cash across two tranches for the 2 years
following completion, subject to meeting certain performance criteria for both
years.

VTS has a good track record of profitable, cash-generative growth. Based on
unaudited accounts, in the year ended 31 December 2023, VTS generated revenue
of $3.5m (2022: $2.4m), earnings before interest, tax, depreciation and
amortisation ('EBITDA') of $1.9m (2022: $1.2m) and adjusted operating profit
of $1.5m (2022: $0.8m).  Unaudited net assets at 31 March 2024 were
approximately $5m.

The Board expects that the Acquisition will be earnings enhancing in FY24,
with revenues for the 5-month period forecast to be approximately $1.8m
(£1.4m) and adjusted operating profit of approximately $0.7m (£0.5m).

VTS is being acquired from its two shareholders, Mr Gerard Glinsky and Mr
David Ploucha, both of whom will remain in the business to ensure ongoing
delivery of the growth expectations.

More information on VTS can be found on its website at www.venshuretest.com

Notice of interim results

The Group expects to announce its interim results for the six months ended 29
February 2024 on 23 April 2024. The management team will be hosting a
presentation for analysts on the day of the results. Analysts who wish to
attend the presentation should register their interest with Teneo at
abdynamics@teneo.com or 0207 353 4200.

A presentation will also be provided on the Investor Meet Company platform on
24 April 2024 at 9am.  Anyone wishing to attend should register their
interest via
https://www.investormeetcompany.com/ab-dynamics-plc/register-investor.

Dr James Routh, Chief Executive Officer, said:

"I am very pleased to announce the acquisition of VTS and the expansion of the
Group's testing services provision in the USA. The acquisition expands both
our capability and geographic coverage in the important and growing field of
EV battery and powertrain performance evaluation.

"Customer focus on electric vehicle and battery technology is a long-term
trend that will support continued growth at AB Dynamics as competition
increases and new vehicle models require additional development work, testing
and validation.

"VTS has a first-class reputation for providing vehicle testing services to
its OEM customer base and we look forward to leveraging the sales capabilities
of AB Dynamics to drive cross-selling and expand this further.

"We expect the acquisition to provide us with an excellent platform for
further growth and we are delighted to welcome the VTS team to AB Dynamics."

 

Enquiries:

AB Dynamics
plc
01225 860 200

Dr James Routh, Chief Executive Officer

Sarah Matthews-DeMers, Chief Financial Officer

 

Peel Hunt LLP  (Nominated Adviser and Joint Broker ) 0207 894 7000

Mike Bell

Ed Allsopp

 

Stifel Nicolaus Europe Limited (Joint Broker)
                        0207 170 7600

Matthew Blawat

Harry Billen

 

Teneo
 
       0207 353 4200

James Macey White

Matt Low

Arthur Rogers

 

Certain information contained in this announcement would have constituted
inside information (as defined by Article 7 of Regulation (EU) No 596/2014)
("MAR") prior to its release as part of this announcement and is disclosed in
accordance with the Company's obligations under Article 17 of those
Regulations.

The person responsible for arranging the release of this information is
Felicity Jackson, Group Legal Counsel.

 

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