REG - AB Dynamics PLC - Final Results
26/11/2024 07:00
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RNS Number : 5880N AB Dynamics PLC 26 November 2024
26 November 2024
AB Dynamics plc
Final results for the year ended 31 August 2024
"Strong revenue and profit growth with margin expansion"
AB Dynamics plc ("AB Dynamics", the "Company" or the "Group"), the designer,
manufacturer and supplier of advanced testing, simulation and measurement
products to the global transport market, is pleased to announce its final
results for the year ended 31 August 2024.
Audited Audited
2024 2023
£m £m
Revenue 111.3 100.8 +10%
Gross margin 59.6% 59.5% +10bps
Adjusted EBITDA(1) 24.2 20.5 +18%
Adjusted operating profit(1) 20.3 16.6 +22%
Adjusted operating margin(1) 18.2% 16.5% +170bps
Statutory operating profit 12.7 12.6 +1%
Adjusted cash flow from operations(1) 27.9 23.5 +19%
Net cash 28.6 32.0
Pence Pence
Adjusted diluted earnings per share(1) 70.0 60.8 +15%
Statutory diluted earnings per share 41.7 47.4 -12%
Total dividend per share 7.63 6.36 +20%
(1)Before amortisation of acquired intangibles, acquisition related charges
and exceptional items. A reconciliation to statutory measures is given below.
Financial highlights
· Revenue increased by 10% reflecting growth across all three
sectors, with market and customer activity levels remaining positive through
the year
· The proportion of recurring revenue increased to 45% (2023: 40%)
· Operating margin improved by 170bps to 18.2% as a result of
operating leverage and operational improvements
· Significant operating cash generation of £27.9m (2023: £23.5m)
with cash conversion of 115% (2023: 114%), resulting in net cash at year end
of £28.6m (2023: £32.0m) after £17.0m of investment in acquisitions
· Proposed final dividend of 5.30p per share, bringing the total
dividend for the year to 7.63p per share (2023: 6.36p per share), an increase
of 20%, reflecting the Board's confidence in the Group's financial position
and prospects
Operational and strategic highlights
· New product development continues at pace and in line with the
technology roadmap for testing products and simulation markets, alongside
development of the core technology for ABD Solutions
o The Group's pedestrian dummy, the Soft Pedestrian 360, the Soft Motorcycle
360 and the LaunchPad Spin have been approved by Euro NCAP
o ABD Solutions delivered the first units of the retrofit pedestrian
detection system for the construction industry
· Initial contract win for ABD Solutions of £2m for an automated
mileage accumulation solution for delivery in FY 2025 with potential for
further follow-on orders
· The Group acquired Venshure Test Services (VTS), a provider of
mileage accumulation, electric vehicle and environmental testing services in
the US, with the integration progressing as planned
· Since the year end, the Group has acquired Bolab Systems GmbH
(Bolab), a niche supplier of automotive power electronics testing solutions
· MSCI AAA rating achieved
· Well placed to sustain growth momentum over the medium term,
supported by:
o Target organic growth of 10% per year across core markets, supported by
regulatory tailwinds and rapid technology change, with a significantly
strengthened and scalable operational and commercial platform
o Further margin expansion to 20% target, through operating leverage, supply
chain improvements and operational efficiencies
o Strong cash generation that provides scope for further value-enhancing
investment in FY 2025 and beyond
o The opportunity beyond automotive markets presented by ABD Solutions,
transitioning from technology development to commercialisation
Current trading and outlook
· Trading in early FY 2025 has been strong, supported by a solid
order book, providing good visibility into the new financial year
· Whilst being mindful of a potential slowdown in timing of
pipeline conversion due to disruption in the automotive market and customer
delivery schedules, the Board expects to deliver adjusted operating profit for
FY 2025 slightly ahead of current expectations(2)
· Future growth prospects remain supported by long-term structural
and regulatory growth drivers in active safety, autonomous systems and the
automation of vehicle applications.
There will be a presentation for analysts this morning at 9.00am at Stifel,
150 Cheapside, London, EC2V 6ET. Please contact abdynamics@teneo.com if you
would like to attend.
Commenting on the results, Dr James Routh, Chief Executive Officer said:
"The Group has delivered a very strong performance, with sustained high levels
of demand across key markets, demonstrating the benefits of the investment
made in recent years in the commercial and operating capability of the
business.
"We see significant opportunity in our core markets in automotive, which are
supported by long-term structural and regulatory growth drivers, and are
continuing to invest in new product development and technology. In addition,
we are investing in innovative technologies to diversify the business through
our technology accelerator, ABD Solutions.
"Trading in the early part of FY 2025 has been strong, supported by a solid
order book, providing good visibility into the new financial year. Whilst
being mindful of a potential slowdown in timing of pipeline conversion due to
disruption in the automotive market and customer delivery schedules, the Board
remains confident that the Group will make further financial and strategic
progress this year. With strong trading momentum entering FY 2025 and
benefiting from the acquisition of Bolab and improving margins, the Board
expects to deliver FY 2025 adjusted operating profit slightly ahead of current
expectations(2)."
(2) The Company is aware of seven analysts publishing independent research.
The Company compiled analyst expectations for the year ended 31 August 2025 is
for a mean adjusted operating profit of £21.5m.
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 418 8900
Mike Bell
Ed Allsopp
Stifel Nicolaus Europe Limited (Joint Broker) 0207 710 7600
Matthew Blawat
Harry Billen
Teneo 0207 353 4200
James Macey White
Matt Low
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 David
Forbes, Company Secretary.
About AB Dynamics plc
AB Dynamics is a leading designer, manufacturer and supplier of advanced
testing, simulation and measurement products to the global transport market.
AB Dynamics is an international group of companies headquartered in Bradford
on Avon. AB Dynamics currently supplies all the major automotive
manufacturers, Tier 1 suppliers and service providers, who routinely use the
Group's products to test and verify vehicle safety systems and dynamics.
Group overview
The Group delivered a very strong set of results, continuing the trend of
double-digit revenue growth and margin expansion. This was driven by
improvements in its commercial and operating capabilities, underpinned by
positive market dynamics in all three sectors.
During FY 2024, the Group continued to deliver against its strategic
priorities by launching new products and services and through an initial
contract award in ABD Solutions. The acquisition of VTS also expanded its
presence in the testing services market, complementing the Group's existing
offering.
Over the last five years, the Group has been transformed from a single entity
in the UK to a multi-national group with 12 facilities in six countries across
Europe, North America and Asia. Building on the strength of the core business,
coupled with value enhancing acquisitions, the Group now has a solid and
scalable platform from which to capitalise on a multi-year growth opportunity,
supported by strong long-term structural and regulatory tailwinds.
The Group's mission is to accelerate its customers' drive towards net zero
emissions, improving road safety and the automation of vehicle applications.
Its market-leading position is driven by its technical capabilities and
reputation. Its products must satisfy challenging and complex requirements
meaning barriers to entry are high.
Market update
The automotive sector continues to evolve and adapt to the structural and
regulatory changes driving rapid unprecedented change:
· The ongoing societal need for improvements in road safety is
driving the development of active safety, ADAS and increasing levels of
autonomous systems
· The global challenge of climate change is driving strong demand
for the acceleration of the implementation of electric vehicles (EVs), hybrids
and development of other alternative powertrains
· New entrants into the automotive market, particularly in EVs and
autonomy, have placed pressures on traditional automotive OEMs to rapidly
develop new technologies which require more complex tests
Consequently, whilst the automotive sector is experiencing disruption to
production volumes and a slower rate of increase in EV sales than anticipated,
it remains fully committed to investing in R&D in these key areas as each
OEM needs to respond to these challenges. OEMs need AB Dynamics' testing
products and services for development of vehicles and certification of active
safety systems across all types of powertrains. The Group's simulation
capabilities enable OEMs to accelerate the efficiency and speed of development
by allowing customers to test in a virtual environment.
Financial performance
The Group delivered revenue growth in the year of 10% to £111.3m (2023:
£100.8m) with increases across all three sectors, continuing the Group's
track record of top-line growth due to improvements in road safety technology,
new vehicle models and increased regulation.
Gross margin was 59.6%, up 10 bps on 2023, with operational efficiencies in
testing products and increased utilisation in US testing services offset by a
change in mix in simulation.
Group adjusted operating profit increased by 22% to £20.3m (2023: £16.6m).
The adjusted operating margin increased to 18.2% (2023: 16.5%), as a result of
operating leverage and operational efficiency.
Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA)
increased by 18% to £24.2m (2023: £20.5m). Adjusted EBITDA margin was 21.7%
(2023: 20.4%), an increase of 130 bps.
Adjusted net finance costs reduced to £0.3m (2023: £0.4m).
Adjusted profit before tax was £20.0m (2023: £16.3m). The Group adjusted tax
charge totalled £3.7m (2023: £2.2m), an adjusted effective tax rate of 18.7%
(2023: 13.2%).
Adjusted diluted earnings per share was 70.0p (2023: 60.8p), an increase of
15%, reflecting the increase in operating profit offset by a higher tax
charge.
The Group delivered strong adjusted operating cash flow of £27.9m (2023:
£23.5m) with cash conversion of 115% (2023: 114%) and net cash at the end of
the year of £28.6m (2023: £32.0m), underpinning a robust balance sheet and
providing the resources to fund the post year-end acquisition of Bolab and
continue the Group's investment programme.
The order book at 31 August 2024 was £30.3m (2023: £42.9m) covering
approximately 25% of FY 2025 expected revenue, reflecting the standard lead
time for testing products of approximately three months. The reduction on the
prior year is due to timing of order intake in simulation.
Statutory operating profit was flat at £12.7m (2023: £12.6m) and after net
finance costs of £0.7m (2023: £1.1m), statutory profit before tax increased
by 4% from £11.5m to £12.0m. The statutory tax charge increased to £2.3m
(2023: £0.5m), since the prior year benefited from a one-off non-taxable gain
on the release of accrued contingent consideration on the acquisition of
Ansible Motion. Statutory basic earnings per share was 42.3p (2023: 48.0p). A
reconciliation of statutory to underlying non-GAAP financial measures is
provided below.
Sector review
Revenue 2024 2023(1)
£m £m
Driving robots 29.2 25.2 +16%
ADAS platforms 33.9 30.5 +11%
Laboratory testing 6.3 7.3 -14%
Testing products 69.4 63.0 +10%
Testing services 16.7 12.9 +29%
Simulation 25.2 24.9 +1%
Total revenue 111.3 100.8 +10%
(1)The Group previously reported two sectors, track testing and laboratory
testing and simulation. Following the growth in testing services, these are
now reported separately. Laboratory testing is now included within testing
products to better reflect the nature of the products.
Testing products
The Group's testing products are used on proving grounds, test tracks and in
the laboratory to evaluate the performance of vehicle active safety systems,
autonomous technologies, EVs, vehicle durability and vehicle dynamics.
Testing products revenue of £69.4m was up 10% against 2023 (£63.0m) with
growth in ADAS platforms and driving robots offset by a reduction in
laboratory testing products.
Driving robot sales increased 16% to £29.2m (2023: £25.2m) and ADAS platform
sales increased 11% to £33.9m (2023: £30.5m). The Group expects continued
growth in this area as new regulatory requirements for evolving ADAS
technologies are released, such as the recent launch of the Euro NCAP 2030
roadmap and its new Safer Trucks rating scheme. It is expected that there will
be over 700 Euro NCAP test scenarios by 2025, up from 591 in 2023. New tests
for commercial vehicles offer further opportunities for market expansion. The
recent launch of a new range of soft targets including motorcycles and
articulating pedestrians is expected to drive further growth.
Laboratory testing revenue relates to sales of our market-leading SPMM
products, which are large-scale, high value testing rigs used to characterise
the kinematics and compliance of vehicles under development. Revenue, which is
dependent on the timing of order and delivery, was down 14% at £6.3m (2023:
£7.3m). This long-standing product which has been supplied to global
customers for the past 25 years has evolved significantly over this period,
culminating in the launch of the SPMM Plus.
The Group continues to invest in new product development in the testing
products sector in order to meet forthcoming regulatory requirements and to
ensure we retain our market leadership in testing technology.
Testing services
Testing services includes revenue from the Group's test facility in
California, USA, where testing of ADAS systems and vehicle dynamics is
performed on behalf of OEMs, technology developers and government agencies.
VTS, the Group's recent acquisition based in Michigan, USA, performs
laboratory-based mileage accumulation testing and assessment of EV powertrain
and battery performance.
In China, the Group provides on-road vehicle testing services for the
assessment of all aspects of vehicle performance, particularly focusing on EV
performance, charging capability and vehicle connectivity.
This sector saw significant revenue growth of 29% to £16.7m (2023: £12.9m)
in advance of new regulatory requirements, following the removal of external
impediments that adversely impacted the prior year. In the Group's Californian
operation, we saw improved access to vehicles for testing and in the China
based operation there was a relaxation of pandemic restrictions.
Simulation
The Group provides both physical simulators and advanced, physics based
simulation software. Simulators are used by both automotive manufacturers and
motorsport teams to accurately represent the real world using the rFpro
software, coupled with state-of-the-art motion platforms and static driving
simulators to assist in development of new vehicles and improve performance.
Simulation revenue increased by 1% to £25.2m (2023: £24.9m). Growth in
simulation software was offset by a decrease in revenue from simulator motion
platforms due to the timing of order intake for these large capital items.
Strategic progress
The Group continues to make good progress against its organic-led growth
strategy, supplemented with value-enhancing acquisitions.
During FY 2024, the Group has expanded its testing product offering, with new
products such as the Soft Pedestrian 360, Soft Motorcycle 360 and the
LaunchPad Spin having been approved by Euro NCAP.
Testing services have been strengthened through the acquisition of VTS.
In simulation, the integration of Ansible Motion, which was acquired in the
previous year, positions the Group to benefit from a strengthened market
position in this important area.
The increase in the level of recurring revenue to 45% (2023: 40%) enhances the
resilience of the Group's business model.
The Group has continued to develop automated solutions for new markets and
during the year delivered the initial units of a product for the construction
industry and won a contract to supply an automated mileage accumulation
solution.
Following significant investment in capability and capacity, the Group now has
a solid and scalable operational and commercial platform from which to
capitalise on an ambitious multi-year organic-led growth opportunity,
supported by strong long-term structural and regulatory growth drivers and
supplemented with value-enhancing acquisitions.
We will create value for shareholders through:
· Organic revenue growth supported by our market drivers
· Operating margin expansion from operational gearing, improvements
in the supply chain and operational efficiency
· Further value-enhancing acquisitions
Our ambition is to double revenue and triple operating profit over the medium
term, through the compounding effect of organic revenue growth of
approximately 10% per year, an improvement in the operating margin to 20% and
investing cash generated into acquisitions.
Acquisitions
On 2 April 2024, the Group acquired VTS, a provider of vehicle testing
services, including environmental testing and range certification for EVs. The
initial consideration was $15.0m (£11.9m). Contingent consideration of up to
$15.0m will become payable in cash subject to certain performance criteria
being met for each of the two years following completion. The acquisition
expands both the Group's capability and geographic coverage in the important
and growing field of EV battery and powertrain performance evaluation. It also
provides the opportunity to leverage AB Dynamics' existing sales capabilities
to drive cross-selling. VTS has been integrated into the Group's testing
services sector and since acquisition has been earnings accretive, delivering
£1.0m of revenue and £0.4m of adjusted operating profit during FY 2024.
After the year end, on 25 September 2024, the Group acquired Bolab, a niche
supplier of automotive power electronics testing solutions, based in Germany.
Bolab supplies low-voltage and high-voltage equipment for testing automotive
sub-systems and components for conventional, hybrid and EVs. The initial
consideration was €5.0m (£4.2m). Contingent consideration of up to €6.0m
(£5.0m) will become payable in cash across two tranches for the two years
following completion, subject to meeting certain performance criteria for each
year. The acquisition supports the expansion of the Group's capabilities in
the testing products business and provides further alignment with the
structural growth drivers in the sector.
Acquisitions have been, and will continue to be, a significant part of the
overall strategy and there is a promising pipeline of potential
value-enhancing and strategically compelling acquisition opportunities.
Sustainability
The Group is committed to environmental sustainability, both globally and in
its local communities, and reducing its environmental impact. It is the
Group's mission to empower its customers to accelerate the development of
vehicles that are not only safer, but also more efficient with less of an
impact on the environment. The Group is continually looking for opportunities
to improve; environmental sustainability is essential.
The Group is committed to the goal of becoming net zero for market based Scope
1 and 2 emissions by 2040 and working to be a net zero organisation by 2050.
This will include the further development of initiatives to reduce its carbon
emissions, waste and water usage, using improved methods of data collection so
that more achievable targets can be set in the future. It also gives priority
to ensuring the health, safety and wellbeing of all employees across the
Group.
Alternative performance measures
In the analysis of the Group's financial performance and position, operating
results and cash flows, alternative performance measures are presented to
provide readers with additional information. The principal measures presented
are adjusted measures of earnings including adjusted operating profit,
adjusted operating margin, adjusted EBITDA, adjusted profit before tax,
adjusted earnings per share and adjusted cash flow from operations.
This financial information includes both statutory and adjusted non-GAAP
financial measures, the latter of which the Directors believe better reflect
the underlying performance of the business and provide a more meaningful
comparison of how the business is managed and measured on a day-to-day basis.
The Group's alternative performance measures and KPIs are aligned to the
Group's strategy and together are used to measure the performance of the
business and form the basis of the performance measures for remuneration.
Adjusted results exclude certain items because if included, these items could
distort the understanding of the performance for the year and the
comparability between the periods.
The Group provides comparatives alongside all current year figures. The term
'adjusted' is not defined under IFRS and may not be comparable with similarly
titled measures used by other companies. All profit and earnings per share
figures in this financial information relate to underlying business
performance (as defined above) unless otherwise stated.
A reconciliation of statutory measures to adjusted measures is provided below:
2024 2023
Adjusted Adjustments Statutory Adjusted Adjustments Statutory
EBITDA (£m) 24.2 (1.2) 23.0 20.5 3.1 23.6
Operating profit (£m) 20.3 (7.6) 12.7 16.6 (4.0) 12.6
Operating margin 18.2% 11.5% 16.5% 12.5%
Finance expense (£m) (0.3) (0.4) (0.7) (0.3) (0.8) (1.1)
Profit before tax (£m) 20.0 (8.0) 12.0 16.3 (4.8) 11.5
Taxation (£m) (3.7) 1.4 (2.3) (2.2) 1.7 (0.5)
Profit after tax (£m) 16.3 (6.6) 9.7 14.1 (3.1) 11.0
Diluted earnings per share (pence) 70.0 41.7 60.8 47.4
Cash flow from operations (£m) 27.9 (1.2) 26.7 23.5 (4.2) 19.3
The adjustments comprise:
2024 2023
Profit impact Cash flow impact Profit Cash flow impact
£m £m impact £m
£m
Amortisation of acquired intangibles 6.4 - 7.2 -
Acquisition related costs / (credit) 0.2 0.2 (4.5) 2.8
ERP development costs 1.0 1.0 1.3 1.4
Adjustments to operating profit 7.6 1.2 4.0 4.2
Acquisition related finance costs 0.4 - 0.8 -
Adjustments to profit before tax 8.0 1.2 4.8 4.2
The tax impact of these adjustments was a credit of £1.4m (2023: £1.7m).
Return on capital employed (ROCE)
Our capital-efficient business and high margins enable generation of strong
ROCE (defined as adjusted operating profit as a percentage of capital
employed, being shareholders' equity less net cash plus deferred tax
liabilities and contingent consideration). During the year, ROCE has increased
from 15.4% to 17.4% benefitting from further improvement in operating leverage
alongside continued investment discipline.
Capital allocation
Our capital allocation framework delivers sustainable compounding growth as
well as growing returns to shareholders. Our priorities are:
· Continuous organic investment and innovation to protect and grow
the core business
· Organic investment into ABD Solutions driving growth in adjacent
markets by leveraging core technology
· Complementary acquisitions contributing to one or more of the
Group's stated strategies
· Progressive dividend policy
Research and development
While research and development form a significant part of the Group's
activities, a significant and increasing proportion relates to specific
customer programmes which are included in the cost of the product. Development
costs of £0.2m (2023: £0.5m) have been capitalised in relation to projects
for which there are a number of near-term sales opportunities. Other research
and development costs, all of which have been expensed as incurred, totalled
£0.7m (2023: £0.2m).
Foreign currency exposure
The Group faces currency exposure on its foreign currency transactions and
maintains a natural hedge whenever possible to transactional exposure by
matching the cash inflows and outflows in the respective currencies.
With significant overseas operations, the Group also has exposure to foreign
currency translation risk. On a constant currency basis, revenue would have
been £2.5m higher than reported and both adjusted and statutory operating
profit would have been £0.2m higher as Sterling strengthened against the US
dollar, Euro and Yen. Constant currency revenue growth was 13% and growth in
operating profit was 23%.
Dividends
The Board recognises that dividends continue to be an important component of
total shareholder returns, balanced against maintaining a strong financial
position, and intends to pursue a sustainable and growing dividend policy in
the future having regard to the development of the Group.
The Board is recommending a final dividend of 5.30p per share, giving a total
dividend for the year of 7.63p per share, which is an increase of 20% over the
prior year.
Summary and outlook
The Group has delivered a very strong performance, with sustained high levels
of demand across key markets, demonstrating the benefits of the investment
made in recent years in the commercial and operating capability of the
business.
We see significant opportunity in our core markets in automotive, which are
supported by long-term structural and regulatory growth drivers, and are
continuing to invest in new product development and technology. In addition,
we are investing in innovative technologies to diversify the business through
our technology accelerator, ABD Solutions.
Trading in the early part of FY 2025 has been strong, supported by a solid
order book, providing good visibility into the new financial year. Whilst
being mindful of a potential slowdown in timing of pipeline conversion due to
disruption in the automotive market and customer delivery schedules, the Board
remains confident that the Group will make further financial and strategic
progress this year. With strong trading momentum entering FY 2025 and
benefiting from the acquisition of Bolab and improving margins, the Board
expects to deliver FY 2025 adjusted operating profit slightly ahead of current
expectations(2).
Our market drivers remain strong. This backdrop, along with a strong
acquisition pipeline, provides confidence of delivering continued growth in
revenue and margin in FY 2025 and beyond.
(2) The Company is aware of seven analysts publishing independent research.
The Company compiled analyst expectations for the year ended 31 August 2025 is
for a mean adjusted operating profit of £21.5m.
Directors' Responsibility Statement on the Annual Report and Accounts
The responsibility statement below has been prepared in connection with the
Company's full annual report and accounts for the year ended 31 August 2024.
Certain parts thereof are not included within this announcement.
We confirm to the best of our knowledge:
1. the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
2. the strategic report and directors' report includes a fair review of the
development and performance of the business and the position of the Company
and the undertakings included in the consolidation taken as a whole, together
with a description of the principal risks and uncertainties that they face.
We consider the annual report and accounts, taken as a whole, are fair,
balanced and understandable, and provide the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
This responsibility statement was approved by the Board of Directors on 26
November 2024 and has been signed on its behalf by James Routh and Richard
Elsy CBE.
AB Dynamics plc
Consolidated statement of comprehensive income
For the year ended 31 August 2024
2024 2023
Adjusted *Adjustments Statutory Adjusted *Adjustments Statutory
Note £'000 £000 £'000 £'000 £'000 £'000
Revenue 2 111,253 - 111,253 100,767 - 100,767
Cost of sales (44,972) - (44,972) (40,837) - (40,837)
Gross profit 66,281 - 66,281 59,930 - 59,930
General and administrative expenses (45,982) (7,554) (53,536) (43,326) (9,229) (52,555)
Fair value gain on release of contingent consideration - - - - 5,180 5,180
Operating profit 20,299 (7,554) 12,745 16,604 (4,049) 12,555
Operating profit is analysed as:
Before depreciation and amortisation 24,231 (1,203) 23,028 20,517 3,140 23,657
Depreciation and amortisation (3,932) (6,351) (10,283) (3,913) (7,189) (11,102)
Operating profit 20,299 (7,554) 12,745 16,604 (4,049) 12,555
Net finance expense (272) (447) (719) (354) (713) (1,067)
Profit before tax 20,027 (8,001) 12,026 16,250 (4,762) 11,488
Tax expense 4 (3,746) 1,426 (2,320) (2,146) 1,644 (502)
Profit for the year 16,281 (6,575) 9,706 14,104 (3,118) 10,986
Other comprehensive expense
Items that may be reclassified to consolidated income statement:
Cash flow hedges - - - 124 - 124
Exchange loss on foreign currency net investments (1,767) - (1,767) (2,059) - (2,059)
Total comprehensive income for the year 14,514 (6,575) 7,939 12,169 (3,118) 9,051
* See note 3
2024 2023 2023
Earnings per share Adjusted Statutory Adjusted Statutory
Earnings per share - basic (pence) 5 71.0p 42.3p 61.6p 48.0p
Earnings per share - diluted (pence) 5 70.0p 41.7p 60.8p 47.4p
AB Dynamics plc
Consolidated statement of financial position
As at 31 August 2024
Note 2024
£'000 2023
£'000
ASSETS
Non-current assets
Goodwill 44,568 36,939
Acquired intangible assets 31,293 32,831
Other intangible assets 2,491 2,746
Property, plant and equipment 29,684 25,739
Right-of-use assets 2,861 1,409
110,897 99,664
Current assets
Inventories 14,412 17,954
Trade and other receivables 14,655 14,494
Contract assets 2,295 3,152
Cash and cash equivalents 7 31,803 33,486
63,165 69,086
Assets held for sale 1,893 1,893
LIABILITIES
Current liabilities
Trade and other payables 20,260 20,127
Contract liabilities 7,485 9,234
Short-term lease liabilities 7 1,031 570
Contingent consideration 10 2,770 5,943
31,546 35,874
Non-current liabilities
Deferred tax liabilities 7,507 8,708
Long-term lease liabilities 7 2,207 906
Contingent consideration 10 3,443 -
13,157 9,614
Net assets 131,252 125,155
SHAREHOLDERS' EQUITY
Share capital 230 229
Share premium 62,859 62,781
Other reserves 8 636 2,403
Retained earnings 67,527 59,742
Total equity 131,252 125,155
AB Dynamics plc
Consolidated statement of changes in equity
For the year ended 31 August 2024
Share capital Share premium Other reserves Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000
At 1 September 2022 226 62,260 1,142 48,754 112,382
Total comprehensive income - - (1,935) 10,986 9,051
Share based payments - - - 1,064 1,064
Deferred tax on share based payments - - - 193 193
Dividend paid - - - (1,255) (1,255)
Issue of shares 3 521 3,196 - 3,720
At 31 August 2023 229 62,781 2,403 59,742 125,155
Total comprehensive income - - (1,767) 9,706 7,939
Share based payments - - - 1,175 1,175
Deferred tax on share based payments - - - 219 219
Dividend paid - - - (1,542) (1,542)
Issue of shares 1 78 - - 79
Purchase of own shares - - - (1,773) (1,773)
At 31 August 2024 230 62,859 636 67,527 131,252
AB Dynamics plc
Consolidated cash flow statement
For the year ended 31 August 2024
Note 2024 2023
£'000
£'000
Profit before tax 12,026 11,488
Depreciation and amortisation 10,283 11,102
Finance expense 719 1,067
Share based payment 1,421 1,263
Release of contingent consideration - (5,180)
Operating cash flows before changes in working capital 24,449 19,740
Decrease / (increase) in inventories 3,542 (2,612)
Decrease in trade and other receivables 965 2,514
Decrease in trade and other payables (2,221) (369)
Cash flows from operations 26,735 19,273
Cash flows from operations are analysed as:
Adjusted cash flows from operations 27,938 23,450
Cash impact of adjusting items (1,203) (4,177)
Cash flows from operations 26,735 19,273
Finance costs paid (118) (291)
Income tax (paid) / received (3,114) 363
Net cash flows from operating activities 23,503 19,345
Cash flows used in investing activities
Acquisition of businesses net of cash acquired (16,970) (10,656)
Purchase of property, plant and equipment (3,638) (2,930)
Capitalised development costs and purchased software (189) (469)
Net cash used in investing activities (20,797) (14,055)
Cash flows used in financing activities
Drawdown of loans 3,928 6,000
Repayments of loans (3,928) (6,000)
Dividends paid 6 (1,542) (1,255)
(Purchase of own shares) / proceeds from issue of share capital (1,694) 457
Repayment of lease liabilities (1,145) (1,124)
Net cash used in financing activities (4,381) (1,922)
Net (decrease) / increase in cash and cash equivalents (1,675) 3,368
Cash and cash equivalents at beginning of the year 33,486 30,141
Effects of exchange rate changes (8) (23)
Cash and cash equivalents at end of the year 31,803 33,486
AB Dynamics plc
Notes to the consolidated financial statements
For the year ended 31 August 2024
1. Basis of preparation
The Company is a public limited company limited by shares and registered in
England and Wales with company number 08393914. The Company is domiciled in
the United Kingdom and the registered office and principal place of business
is Middleton Drive, Bradford on Avon, Wiltshire, BA15 1GB.
The principal activity of the Group is the design, manufacture and supply of
advanced testing, simulation and measurement products to the global transport
market. The Group's products and services are used primarily for the
development of road vehicles, particularly in the areas of active safety and
autonomous systems.
The annual financial statements of the Group are prepared in accordance with
UK-adopted International Accounting Standards and applicable law.
The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 August 2024 or 31 August 2023 but is
derived from those accounts. A copy of the statutory accounts for the year
ended 31 August 2023 has been delivered to the Registrar of Companies. The
auditor's report on those accounts was unqualified and did not contain any
statements under section 498(2) or (3) of the Companies Act 2006.
A number of new standards became applicable for the current reporting period.
The application of these amendments has not had any material impact on the
disclosures, net assets or results of the Group.
Going concern basis of accounting
The financial information has been prepared under the going concern basis,
which assumes that the Group will continue to be able to meet its liabilities
as they fall due for the foreseeable future.
The Directors have assessed the principal risks to the going concern
assumption, including by modelling a severe but plausible downside scenario,
whereby the Group experiences:
· A reduction in demand of 25% over the next two financial years
· A 10% increase in operating costs
· An increase in cash collection cycle
· An increase in input costs resulting in reduction in gross
margins by 12%.
With £31.8m of cash at 31 August 2024 and a £15.0m undrawn revolving credit
facility, in this severe downside scenario, the Group has sufficient headroom
to be able to continue to operate for the foreseeable future. The Directors
believe that the Group is well placed to manage its financing and other
business risks satisfactorily, and have a reasonable expectation that the
Group will have adequate resources to continue in operation for at least 12
months from the signing date of the financial statements. They therefore
consider it appropriate to adopt the going concern basis of accounting in
preparing the financial statements.
AB Dynamics plc
Consolidated statement of comprehensive income
For the year ended 31 August 2024
2. Segment information
The Group derives revenue from the sale of its advanced measurement,
simulation and testing products and services used in assisting the global
transport market in the laboratory, on the test track and on-road. The Group
has three segments.
The operating segments are based on internal reports about components of the
Group, which are regularly reviewed and used by the Board of Directors being
the Chief Operating Decision Maker.
2024 2023
Testing products Testing services Testing products Testing services
£'000 £'000 Simulation Unallocated* Total £'000 £'000 Simulation Unallocated* Total
£'000 £'000 £'000 £'000 £'000 £'000
Revenue 69,350 16,697 25,206 - 111,253 63,016 12,858 24,893 - 100,767
Adjusted operating profit 13,160 4,219 7,025 (4,105) 20,299 9,079 2,878 8,296 (3,649) 16,604
Operating profit is analysed as:
Before depreciation and amortisation 15,414 5,351 7,539 (4,073) 24,231 11,834 3,723 8,552 (3,592) 20,517
Depreciation and amortisation (2,254) (1,132) (514) (32) (3,932) (2,755) (845) (256) (57) (3,913)
Adjusted operating profit 13,160 4,219 7,025 (4,105) 20,299 9,079 2,878 8,296 (3,649) 16,604
Amortisation on acquired intangibles - (3,386) (2,965) - (6,351) - (3,055) (4,134) - (7,189)
Adjusting items - - - (1,203) (1,203) - - - 3,140 3,140
Operating profit 13,160 833 4,060 (5,308) 12,745 9,079 (177) 4,162 (509) 12,555
Net finance expense (719) (1,067)
Profit before tax 12,026 11,488
Tax expense (2,320) (502)
Profit for the year 9,706 10,986
*Unallocated items are head office costs that cannot be allocated to a
business segment.
Analysis of revenue by destination:
2024
£'000 2023
£'000
Europe (including United Kingdom) 36,809 26,970
North America 25,867 25,171
Asia Pacific 48,407 46,409
Rest of World 170 2,217
111,253 100,767
No customers individually represent more than 10% of total revenue for the
year ended 31 August 2024 (2023: No customers individually represent more than
10% of total revenue).
Assets and liabilities by segment are not reported to the Board of Directors,
therefore are not used as a key decision-making tool and are not disclosed
here.
A disclosure of non-current assets by location is shown below:
2024 2023
£'000 £'000
Europe (including United Kingdom) 64,397 67,248
North America 30,797 15,508
Asia Pacific 15,703 16,908
110,897 99,664
3. Alternative performance measures
In the analysis of the Group's financial performance and position, operating
results and cash flows, alternative performance measures are presented to
provide readers with additional information. The principal measures presented
are adjusted measures of earnings including adjusted operating profit,
adjusted operating margin, adjusted profit before tax, adjusted EBITDA and
adjusted earnings per share.
The financial statements include both statutory and adjusted non-GAAP
financial measures, the latter of which the Directors believe better reflect
the underlying performance of the business and provide a more meaningful
comparison of how the business is managed and measured on a day-to-day basis.
The Group's alternative performance measures and KPIs are aligned to the
Group's strategy and together are used to measure the performance of the
business and form the basis of the performance measures for remuneration.
Adjusted results exclude certain items because if included, these items could
distort the understanding of the performance for the year and the
comparability between the periods.
We provide comparatives alongside all current year figures. The term
'adjusted' is not defined under IFRS and may not be comparable with similarly
titled measures used by other companies. All profit and earnings per share
figures in this financial information relate to underlying business
performance (as defined above) unless otherwise stated.
2024 2023
£'000 £'000
Amortisation of acquired intangibles 6,351 7,189
Acquisition related costs / (credit) 231 (4,502)
ERP development costs 972 1,362
Adjustments to operating profit 7,554 4,049
Acquisition related finance costs 447 713
Adjustments to profit before tax 8,001 4,762
Amortisation of acquired intangibles
The amortisation relates to the acquisition of Venshure Test Services on 2
April 2024, Ansible Motion Limited on 20 September 2022, and the businesses
acquired in previous years, DRI, rFpro and VadoTech.
Acquisition related costs / (credit)
The costs in the current year relate to the acquisition of Venshure Test
Services. The credit in the prior year relates to the release of contingent
consideration on the acquisition of Ansible Motion (£5.2m), less acquisition
costs (£0.7m).
ERP development costs
These costs relate to the development, configuration and customisation of the
Group's new ERP system which is hosted on the cloud.
Acquisition related finance costs
Finance costs relate to the unwind of the discount on contingent consideration
payable on the acquisition of Venshure Test Services and Ansible Motion (2023:
Ansible Motion).
Tax
The tax impact of these adjustments was as follows: amortisation of acquired
intangibles £1.1m (2023: £1.3m), acquisition related costs £0.1m (2023:
£0.1m) and ERP development costs £0.2m (2023: £0.3m).
Cash impact
The operating cash flow impact of the adjustments was an outflow of £1.2m
(2023: £4.2m) being £1.0m (2023: £1.4m) in relation to ERP development
costs and £0.2m (2023: £2.8m) in relation to acquisition costs.
4. Tax
The statutory effective rate of tax for the year of 19.3% (2023: 4.4%) is
lower than (2023: lower than) the standard rate of corporation tax in the UK
of 25.0% (2023: 21.5%) due to patent box relief. In the prior year, the
effective tax rate also benefited from the release of the accrual for
contingent consideration on the acquisition of Ansible Motion which was not
taxable.
The effective rate of tax on the adjusted profit before tax is 18.7% (2023:
13.2%). The increase in the year was due to the full-year effect of the
increase in the UK corporation tax rate.
5. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
equity holders by the weighted average number of ordinary shares in issue
during the period.
Diluted earnings per share is calculated by adjusting the weighted average
number of ordinary shares outstanding to assume conversion of all potentially
dilutive shares. The Company has one category of potentially dilutive shares,
namely share options.
The calculation of earnings per share is based on the following earnings and
number of shares:
2024 2023
Weighted average number of shares ('000)
Basic 22,944 22,886
Diluted 23,249 23,193
Earnings per share
Profit for the year attributable to owners of the Group (£'000) 9,706 10,986
Basic earnings per share 42.3p 48.0p
Diluted earnings per share 41.7p 47.4p
Adjusted earnings per share
Adjusted profit for the year attributable to owners of the Group (£'000) 16,281 14,104
Adjusted basic earnings per share 71.0p 61.6p
Adjusted diluted earnings per share 70.0p 60.8p
6. Dividends
2024 2023
£'000 £'000
Final 2022 dividend paid of 3.54p per share - 811
Interim 2023 dividend paid of 1.94p per share - 444
Final 2023 dividend paid of 4.42p per share 1,009 -
Interim 2024 dividend paid of 2.33p per share 533 -
1,542 1,255
The Board has proposed a final dividend in respect of the year ended 31 August
2024 of 5.30p per share totalling £1,217,000. An interim dividend was paid of
2.33p per share totalling £533,000. If approved, the final dividend will be
paid on 31 January 2025 to shareholders on the register on 17 January 2025.
7. Net cash
Net cash comprises cash and cash equivalents and lease liabilities.
The reconciliation of cash and cash equivalents to net cash is as follows:
2024 2023
£'000 £'000
Cash and cash equivalents 31,803 33,486
Lease liabilities (3,238) (1,476)
28,565 32,010
The Group has a £15.0m revolving credit facility which extends to 4 February
2026.
8. Other reserves
Merger relief reserve Reconstruction reserve Translation reserve Hedging reserve Other reserves
£'000 £'000 £'000 £'000 £'000
At 1 September 2022 11,390 (11,284) 1,160 (124) 1,142
Other comprehensive expense - - (2,059) 124 (1,935)
Issue of shares 3,196 - - - 3,196
At 31 August 2023 14,586 (11,284) (899) - 2,403
Other comprehensive expense - - (1,767) - (1,767)
At 31 August 2024 14,586 (11,284) (2,666) - 636
9. Foreign exchange
The foreign exchange rates applied during the year were:
2024 2023
Year-end rate
US dollar 1.32 1.27
Euro 1.19 1.16
Yen 191 186
Average rate
US dollar 1.26 1.21
Euro 1.17 1.15
Yen 191 165
10. Acquisition of subsidiary
On 2 April 2024, the Group acquired 100% of Venshure Test Services LLC for
total cash consideration of up to $30,000,000 (£23,872,000). The acquisition
supports a number of the Group's strategic priorities, including expanding the
Group's capabilities and broadening the scope of services in the testing
services area and complementing the Group's existing California-based track
testing services business with laboratory based testing.
The acquisition has been completed for an initial cash consideration of
$13,500,000 (£10,742,000), being $15,000,000 (£11,936,000) initial
consideration less $1,500,000 (£1,085,000 discounted to present value)
retained against potential warranties, 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 $15,000,000 (£11,936,000) will be payable
in cash across two tranches for the two years following completion, subject to
meeting certain performance criteria for both years.
The carrying amount of each class of Venshure Test Services assets before
combination is set out below:
Fair value Intangible asset adjustments £'000 Provisional fair value
£'000
£'000
Intangible assets - 5,252 5,252
Property, plant and equipment 3,276 - 3,276
Right of use asset 504 - 504
Trade and other receivables 268 - 268
Trade and other payables (217) - (217)
Lease liabilities (808) - (808)
Net assets acquired 3,023 5,252 8,275
Goodwill arising on acquisition 8,462
16,737
Initial cash consideration 10,742
Contingent consideration payable 4,910
Discounted retention against warranties 1,085
Total consideration 16,737
Contingent consideration
Contingent consideration 4,910
Retention against warranties 1,085
At acquisition 5,995
Unwind of discount 162
Exchange differences 56
At 31 August 2024 6,213
The fair values set out above are provisional and will be finalised in the
next financial year. Goodwill of £8,462,000 represents the amount paid for
future sales growth from both new customers and new products and employee
know-how.
No deferred tax has been recognised in relation to the intangible assets as
the related amortisation is tax deductible in the US and therefore the tax
base of the assets is equal to their fair value at the date of acquisition.
From the date of acquisition to 31 August 2024, the newly acquired business
contributed £1,000,000 to revenue and £385,000 to adjusted operating profit.
Had the acquisition been completed at the beginning of the period, Group
revenue would have been £112,800,000 and adjusted operating profit would have
been £20,800,000. £162,000 of the discount on the contingent consideration
unwound in the period and has been included in finance expenses.
11. Principal risks
The principal risks and uncertainties impacting the Group are described on
pages 58 to 62 of our Annual Report 2024. They include: downturn or
instability in major geographic markets or market sectors (including
inflation, conflicts and pandemics), supply chain disruption, loss of major
customers and change in customer procurement processes, failure to deliver new
products, dependence on external routes to market, acquisition integration and
performance, cybersecurity and business interruption, competitor actions, loss
of key personnel, threat of disruptive technology, product liability, failure
to manage growth, foreign currency, counterparty risk, credit risk, tax risk,
intellectual property/patents and environmental risk.
12. Post balance sheet event
On 25 September 2024, the Group acquired Bolab Systems GmbH, a niche supplier
of automotive power electronics testing solutions, based in Germany. Bolab
supplies low-voltage and high-voltage equipment for testing automotive
sub-systems and components for conventional, hybrid and EVs. The acquisition
supports the expansion of the Group's capabilities in the testing products
business and provides further alignment with the structural growth drivers in
the sector.
The initial consideration was €5,000,000 (£4,202,000), funded from the
Group's existing cash resources. Contingent consideration of up to
€6,000,000 (£5,042,000) will become payable in cash across two tranches for
the two years following completion, subject to meeting certain performance
criteria for each year.
The book value of the acquired assets and liabilities at the date of
acquisition was approximately €1,500,000 (£1,260,000). The Group is
currently in the process of determining the fair values of the assets and
liabilities acquired.
13. 2024 Annual Report
The Annual Report for the year ended 31 August 2024 will be posted on the
Company's website, www.abdplc.com (http://www.abdplc.com) , on 26 November
2024 and a copy will be posted to shareholders, as required, in advance of the
Company's Annual General Meeting of 16 January 2025.
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