REG - AB Dynamics PLC - Pre-Close Trading Update & Acquisition of Ansible

Ab DynamicsAnnouncement

21/09/2022 07:01

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RNS Number : 0589A  AB Dynamics PLC  21 September 2022

21 September 2022

AB Dynamics plc

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

 

Pre-Close Trading Update

Acquisition of Ansible Motion Limited

 

AB Dynamics (AIM: ABDP), the designer, manufacturer and supplier of advanced
testing, simulation and measurement products to the global transport market,
is pleased to issue the following trading update and the announcement of an
acquisition in advance of the publication of its preliminary results for the
year ended 31 August 2022 ("FY22").

Trading Update

The Group performed strongly during the second half of the year, managing
continued supply chain disruption effectively to deliver strong organic growth
and another record half year period for sales.  As a result, the Board
expects to report revenue for FY22 of approximately £80m, representing year
on year growth of approximately 22%.  With robust margin performance through
the second half, full year adjusted operating profit is also anticipated to be
ahead of current market expectations.

The track testing sector delivered particularly strong growth throughout FY22,
with good growth across all primary product lines. The laboratory testing and
simulation sector showed more modest sales growth, predominantly due to timing
on larger contracts.

The Group maintained its track record of strong operating cash conversion,
with net cash at 31 August 2022 of £29.0m (2021: £22.3m), after capex
investment of £4m.

Despite the significant sales growth throughout the year, order intake
continued to be strong and resulted in another period of positive book to bill
ratio. Whilst mindful of continued uncertainty in the wider economic backdrop,
this provides good momentum as the business enters FY23.

Acquisition of Ansible Motion Limited

The Group has completed the acquisition of Ansible Motion Limited ("Ansible
Motion") for an initial consideration of £19.2m (the "Acquisition").

Ansible Motion is a leading provider of advanced simulators to the global
automotive market. Ansible Motion's products are used for a wide range of
applications including evaluation of Advanced Driver Assistance Systems
("ADAS"), autonomy, vehicle dynamics, powertrain development and motorsport.

Founded in 2009 and headquartered in Norfolk, Ansible Motion has been a
long-standing partner of rFpro, which was acquired by AB Dynamics in 2019.
The Ansible Motion product range complements the existing AB Dynamics range of
driving simulation products, building out the family of products to enable
access to a wider range of customers and applications.

The Acquisition supports a number of the Group's stated strategic priorities
including:

·      Expanding the Group's product range in the simulation market and
achieving critical mass in the simulation business unit;

·      Enhancing the Group's capabilities in the field of simulation
R&D through a talented team of engineers and increasing the capacity of
the business through an additional product development and manufacturing
facility in the UK; and

·      Synergistic benefits of shared services and access to the
existing AB Dynamics channels to market

 

Financial Considerations

The maximum consideration payable for Ansible is £31.2m, comprising an
initial cash consideration of £16.0m and £3.2m of new ordinary shares in AB
Dynamics issued to the vendors. 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. Conditional consideration of up to £12.0m
will be payable in cash subject to meeting certain performance criteria for
the year ending 31 August 2023.

Ansible Motion has a strong record of profitable, and cash generative
growth.  Based on unaudited accounts, in the year ended 31 March 2022 Ansible
Motion generated revenue of £8.0m (2021: £5.4m), earnings before interest,
tax, depreciation and amortisation ('EBITDA') of £1.9m (2021: £0.8m) and
operating profit of £1.8m (2021: £0.7m).  Net assets at 31 March 2022 were
£4.1m.

The Board expects that the Acquisition will be earnings enhancing in FY23 with
revenues forecast to be approximately £12.0m, based on the existing orderbook
and strong order pipeline, and adjusted operating profit of approximately
£2.2m.  Should this forecast be achieved, the conditional cash payment would
be estimated at £1.3m.

Ansible Motion is being acquired from its three shareholders, Mr Kia
Cammaerts, Mr Jonathan Walker and Mr Robert Stevens, with Mr Cammaerts and Mr
Stevens remaining in the business as Managing Director and Chief Engineer
respectively.

 

Dr James Routh, Chief Executive Officer, said:

"I am very pleased to be able to provide a positive trading update ahead of
the publication of our full year results.  The business has performed
strongly against a backdrop of continued challenging market conditions and
demonstrates the resilience of our business model.

The acquisition of Ansible Motion is another important milestone in our
ongoing strategic development and supports the Group's strategic initiatives
by broadening the scope of the Group's product offering, strengthens our
position in the strategically important global simulation market, and enhances
our capabilities in R&D and manufacturing.

Ansible Motion is a business we have known for a long time, and has an
outstanding reputation for providing customer focussed driving simulation
solutions and, coupled with our existing simulator business and our world
class simulation software rFpro, this acquisition positions us as a market
leader with genuine scale to drive significant continued growth in the
simulation sector.

The existing order book and strong market presence of Ansible Motion, along
with our established international sales channels provides us with an
outstanding platform for growth and we are very pleased to welcome Kia, Robert
and each of Ansible's 38 employees to AB Dynamics."

More information on Ansible Motion can be found on its website at
www.ansiblemotion.com (http://www.ansiblemotion.com/)

 

Notice of results

The Group will announce its results for the year ended 31 August 2022 on
Wednesday 23 November 2022. 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 Tulchan Communications at
abdynamics@tulchangroup.com or 0207 353 4200.

 

Issue of Equity and Total Voting Rights

Pursuant to the acquisition of Ansible Motion, application has been made to
London Stock Exchange for 258,795 consideration shares to be admitted to
trading on AIM and it is expected that Admission will become effective, and
that trading will commence at 08.00 a.m. on 26 September 2022 ("Admission").

Following Admission, and in accordance with the Financial Conduct Authority's
Disclosure Guidance and Transparency Rules ("DTRs"), the Company's total
issued share capital will consist of 22,885,261 ordinary shares of 1 penny
each ("Ordinary Shares") with one voting right per Ordinary Share. The Company
does not hold any Ordinary Shares in Treasury. Shareholders may therefore use
this figure as the denominator for the calculations by which they will
determine if they are required to notify their interest in, or a change to
their interest in the Company, under the DTRs.

 

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.

 

Enquiries:

 

AB Dynamics
plc
01225 860 200

Dr James Routh, Chief Executive Officer

Sarah Matthews-DeMers, Chief Financial Officer

 

Peel Hunt LLP
 
0207 894 7000

Mike Bell

Ed Allsopp

 

Tulchan
Communications
   0207 353 4200

James Macey White

Matt Low

Laura Marshall

 

 

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