TIDMABDP
RNS Number : 2692H
AB Dynamics PLC
23 November 2022
23 November 2022
AB Dynamics plc
Final Results for the year ended 31 August 2022
"Strong strategic progress and financial performance"
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 2022.
Audited Audited
2022 2021
GBPm GBPm
Revenue 80.3 65.4 +23%
Gross margin 57.5% 56.8% +70 bps
EBITDA(1) 16.4 13.5 +21%
Adjusted operating profit(1) 12.7 10.8 +18%
Adjusted operating margin(1) 15.8% 16.6% (80 bps)
Statutory operating profit 5.2 4.2 +24%
Adjusted cash flow from
operations(1) 20.7 16.0 +29%
Net cash 29.2 22.3
------------------------------ -------- -------- ---------
Pence Pence
Adjusted diluted earnings
per share(1) 44.5 37.4 +19%
Statutory diluted earnings
per share 17.1 13.1 +31%
Total dividend per share 5.3 4.8 +10%
------------------------------ -------- -------- ---------
(1) Before amortisation of acquired intangibles, acquisition
related charges and exceptional items. A reconciliation to
statutory measures is given below.
Financial highlights
-- Record revenue, order intake and EBITDA delivered, despite a
challenging operational backdrop
-- Market and customer activity levels have remained positive
throughout the year which, together with a recovery of sales to
China and a full year's contribution from the acquisition of
VadoTech, drove revenue growth of 23%:
o Organic revenue increased by 18%, albeit against a prior year
comparative in which the first half was impacted by COVID-19
o Track testing revenue grew by 30%, reflecting increases in
driving robots and Advanced Driver Assistance System (ADAS)
platforms following the recovery in customer activity, as well as
growth in testing services from VadoTech
o Laboratory testing and simulation revenues similar to the
prior year, reflecting significant growth in simulation sales,
offset by lower Suspension Parameter Measurement Machine (SPMM)
revenues due to timing of delivery
-- As expected, adjusted operating margin reduced to 15.8%
driven by the investment in ABD Solutions to support the strategic
long-term growth drivers
o Operating margin across the core business increased to
17.5%
-- Significant operating cash generation of GBP20.7m (2021:
GBP16.0m) with cash conversion of 126%, leaving net cash at year
end of GBP29.2m (2021: GBP22.3m) after funding the final payment on
the acquisition of VadoTech and investing GBP3.8m in capital
expenditure in the period
-- Proposed final dividend of 3.54p per share, with total
dividend of 5.30p per share (2021: 4.80p per share) reflecting the
Board's confidence in the Group's financial position and
prospects
Operational and strategic highlights
-- Whilst the current macroeconomic operating environment still
presents challenges in relation to supply chain disruption, the
Group has been successful in delivering output and mitigating
inflationary cost pressures through price increases for new
orders
-- Further progress made on the implementation of strategic
initiatives targeting diversification, alongside the established
pillars and opening up new markets beyond automotive through the
launch of ABD Solutions
-- ABD Solutions was awarded its first development contract by
an industrial equipment supplier in Japan for a driverless retrofit
solution for mining vehicles
-- New product development continued in line with our technology
roadmap for existing track testing and simulation markets and
development of the core technology for ABD Solutions. Along with
the successful launch of our new range of ADAS dummies, the full AB
Dynamics LaunchPad product range and GST 120 have now been
certified for use in Euro NCAP testing
-- VadoTech Group has been successfully integrated into the
Group and delivered a solid performance since it was acquired in
March 2021
-- Growth in percentage of Group's recurring revenue to 41%, up
from 35%, enhanced by the strengthening of the APAC regional
footprint
-- Post-year-end acquisition of Ansible Motion and the creation
of a new market-facing business unit, AB Simulation, enhances the
Group's simulation capabilities, expands its simulator product
range and achieves critical mass in this attractive sector
Current trading and outlook
-- Momentum into the early part of the new financial year has
been encouraging, supported by a solid order book providing good
visibility through the first half
-- Whilst being mindful of ongoing supply chain disruption and
wider economic uncertainty, the Board remains confident that the
Group will make further financial and strategic progress this year
and its expectations for FY 2023 are unchanged
-- 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 Tulchan Communications, 85 Fleet Street, EC4Y 1AE. Please
contact abdynamics@tulchangroup.com if you would like to
attend.
Commenting on the results, Dr James Routh, Chief Executive
Officer said:
"The Group has delivered an outstanding performance against a
challenging market backdrop which includes the ongoing impacts of
inflation and supply chain constraints. The financial results show
further strong progress, with record levels of order intake,
revenue, adjusted EBITDA and cash generation. In parallel, the
Group has further strengthened in terms of strategic positioning
through both organic investments and acquisitions and has now fully
built out the senior leadership team and operating
capabilities.
"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 new technologies to diversify the business into attractive
adjacent markets through ABD Solutions.
"Our market drivers both in our core business and in ABD
Solutions remain strong. Despite some potential short-term
headwinds relating to global macroeconomic conditions, this
backdrop, along with the Group's recent investments in capability
and new products provides confidence of delivering continued
progress in 2023 and beyond."
Enquiries:
AB Dynamics plc 01225 860 200
Dr James Routh, Chief Executive Officer
Sarah Matthews-DeMers, Chief Financial
Officer
Peel Hunt LLP 0207 418 8900
Mike Bell
Ed Allsopp
Tulchan Communications 0207 353 4200
James Macey White
Matt Low
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 top
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
Despite the challenging economic and operational backdrop, the
Group delivered a strong set of results supported by recent
investments in its capabilities and a recovery in customer activity
levels following the pandemic. The Group has evolved significantly
over the last three years, building a solid and scalable platform
from which to capitalise on a multi-year growth opportunity.
The performance for the year was positive across both halves
with a stronger second half reflecting normal seasonality. The
Group delivered record levels of order intake, revenue and adjusted
EBITDA, despite the headwinds of global inflation and supply chain
constraints and further investment to support its long-term growth
objectives.
The Group continued to deliver against its strategic priorities
by launching new products, developing its service offering to drive
recurring revenues and delivering on its diversification plans
through progress in ABD Solutions. The Group also expanded its
presence in the simulation market through the post-year-end
acquisition of Ansible Motion and the establishment of a new
market-facing business unit, AB Simulation.
The Group's ESG strategy has developed significantly during the
year. ESG is an intrinsic part of the Group's overall purpose and
strategy and this year effort was focused on environmental
performance, diversity of people, engagement with valued employees
and local communities, and continuous improvement in governance and
compliance. This resulted in an improvement in the Group's MSCI ESG
rating to AA, with ambition to make further improvements during
2023.
Whilst the positive momentum from FY 2022 has continued into the
new financial year, macroeconomic headwinds created by the
combination of global inflation, forecast recession and
geopolitical uncertainty have the potential to impact the Group
during 2023. However, the Group is well positioned, with
market-leading products and services, and remains supported by
regulatory and structural growth drivers that provide a strong
position for continued growth and performance during 2023.
Financial performance
The Group delivered significant revenue growth in the year of
23%, to GBP80.3m (2021: GBP65.4m). The second half of the year was
particularly strong with revenue of GBP 42.5m (H2 2021: GBP38.1m),
a record half year period. This growth was delivered despite the
ongoing impacts of inflation and supply chain constraints, which
were successfully mitigated through proactive inventory management
and price increases to the market.
Excluding the impact of the prior year acquisition of VadoTech,
organic revenue increased by 18% in FY 2022, against a prior year
comparative in which the first half of the year was affected by
COVID.
The proportion of recurring revenue continued to increase,
growing to 41% (2021: 35%), benefitting from the full year impact
of the acquisition of VadoTech, which supplemented an increase in
sales of software, long-term service and support contracts, spares,
maintenance and calibration. The level of recurring revenue is now
expected to broadly stabilise ahead of new market offerings which
will be released in the near future.
Gross margins increased by 70 bps to 57.5% (2021: 56.8%), driven
by the mix effect of a higher proportion of track testing revenue
and supported by effective customer pricing leverage.
Adjusted operating profit of GBP12.7m increased 18% against
2021, with a reduction in adjusted operating margin to 15.8% (2021:
16.6%). This was impacted by the investment of GBP1.3m in ABD
Solutions, the Group's new market-facing business unit that
develops solutions to automate vehicle applications, as well as
continued investment in the existing business.
Adjusted earnings before interest, tax, depreciation and
amortisation ('EBITDA') increased by 21% to GBP16.4m (2021:
GBP13.5m). Return on sales (defined as EBITDA divided by revenue)
was 20.4% (2021: 20.6%), a decrease of 20 bps.
Net finance costs were GBP0.4m (2021: GBP0.4m), comprising lease
interest and the unwinding of the discounted value of the deferred
consideration on VadoTech.
Adjusted profit before tax was GBP12.4m (2021: GBP10.4m).
The Group adjusted tax charge totalled GBP2.2m (2021: GBP1.9m),
an adjusted effective tax rate of 17.7% (2021: 18.3%). The
effective tax rate is lower than the current UK corporation tax
rate due to allowances for research and development and patent box.
In future years the effective tax rate is expected to increase
along with the increase in the UK corporation tax rate.
Adjusted diluted earnings per share were 44.5p (2021: 37.4p), an
increase of 19%, reflecting the increase in operating profit and
the reduction in the tax rate.
The Group delivered strong adjusted operating cash flow of
GBP20.7m (2021: GBP16.0m) with cash conversion of 126% after a
reduction in working capital of GBP3.2m. Net cash at the end of the
year was GBP29.2m (2021: GBP22.3m), underpinning a robust balance
sheet and providing significant funding headroom to support the
post-year-end acquisition of Ansible Motion.
Statutory operating profit increased by 24% to GBP5.2m (2021:
GBP4.2m), with statutory profit before tax up 29% to GBP4.9m (2021:
GBP3.8m). The statutory tax charge was GBP1.0m (2021: GBP0.8m),
leaving statutory profit after tax of GBP3.9m (2021: GBP3.0m).
Statutory basic earnings per share was 17.3p (2021: 13.2p). A
reconciliation of statutory to underlying non-GAAP financial
measures is provided below.
Sector review
2022 2021
GBPm GBPm
Driving robots 20.6 16.9 +22%
ADAS test products 29.7 22.7 +31%
Testing services 14.4 10.1 +43%
------------------------- ------ ------ -----
Track testing 64.7 49.7 +30%
Laboratory testing 5.2 6.4 -19%
Simulation 10.4 9.3 +12%
------------------------- ------ ------ -----
Laboratory testing and
simulation 15.6 15.7 -1%
------------------------- ------ ------ -----
Total revenue 80.3 65.4 +23%
------------------------- ------ ------ -----
Track testing
The track testing business delivered revenue of GBP64.7m (2021:
GBP49.7m), a 30% increase against the prior year. The first half of
the financial year showed a strong recovery in track testing
activity levels post-COVID with revenue of GBP30.4m (H1 2021:
GBP20.9m), followed by an even stronger second half , with revenue
of GBP34.3m (H2 2021: GBP28.8m).
The track testing performance was driven by notable sales growth
across both driving robots and ADAS platforms, as well as the full
year impact of the prior year acquisition, VadoTech.
Driving robot sales increased by 22% to GBP20.6m (2021:
GBP16.9m), following the recovery of order intake in H2 2021. The
Group expects continued moderate growth in driving robots once new
regulatory requirements for new ADAS technologies are released.
Revenue from ADAS platforms increased by 31% to GBP29.7m (2021:
GBP22.7m) as demand continues to build, particularly for the new
LaunchPad 80 and GST 120 products which provide the capability to
perform testing at higher speeds. During the year these products
were approved as test tools for official Euro NCAP testing.
The regulatory trend towards multi-object test scenarios will
further drive demand for a range of platforms that meet these test
requirements, including platforms to carry a range of objects (e.g.
pedestrian dummies, cyclists, scooters, motorcycles etc) that can
operate at a range of speeds and can interact with a variety of
test vehicles from passenger cars to commercial vehicles. The
recent launch of a range of ADAS testing dummies, including an
articulated pedestrian and a motorcycle further expands the Group's
offering in this area.
Revenue related to the provision of testing services increased
43% to GBP14.4m (2021: GBP10.1m) due to the full year impact of the
prior year acquisition of VadoTech Group.
Laboratory testing and simulation
Laboratory testing and simulation revenue was flat year-on-year
at GBP15.6m (2021: GBP15.7m) against a very strong prior year
comparator during which revenues grew by 62%.
Simulation delivered further revenue growth of 12% to GBP10.4m
(2021: GBP9.3m), even after a significant step change in the prior
year with growth of 98%. This was driven by the strong order book
for our aVDS simulators at the start of the financial year and
significant growth in revenues from rFpro, following investment in
a number of new capabilities and features. The post-year-end
acquisition of Ansible Motion will enhance our product range,
supporting continued growth.
Revenue from laboratory testing equipment (including SPMM)
declined by 19% to GBP5.2m (2021: GBP6.4m) entirely due to timing
of long-term SPMM contract builds. The market conditions remain
strong and supportive and the order book for SPMM machines supports
continued progress during 2023.
Strategic progress
During the year, the Board conducted its annual strategic review
which has endorsed the continued focus on building and growing the
core business, coupled with delivering on the Group's
diversification plans through ABD Solutions. This organic-led
growth strategy, compounded through value-enhancing acquisitions,
enables the Group to set ambitious aspirational growth
objectives.
Following the launch of ABD Solutions at the end of the last
financial year, the Group has made strong progress against its
stated strategic priorities. ABD Solutions has successfully
developed the core modular technology required for our initial
market focus in mining and defence and has been successful in
winning development funding from a major Japanese mining customer
and signed a Memorandum of Understanding with Amaroq plc for
sustainable gold mining operations in Greenland.
In the core business, the Group has developed and launched
several new products including the new variant of our driving
simulator, the aVDS-HP, aimed at the general automotive market.
The Group also expanded its track testing product offering to
cover ADAS testing dummies, including a market-leading articulating
pedestrian, a scooter/moped and a motorcycle that can be used in
conjunction with the LaunchPad 80 at high test speeds. A new ADAS
platform product, LaunchPad Spin, is nearing completion which
expands the LaunchPad product family to lower speed, high
manoeuvrability applications. We expect these new products to be
market-leading and to drive growth in track testing order intake
and revenue during 2023.
VadoTech Group has been successfully integrated into the Group
and delivered a solid performance since it was acquired in March
2021.
Towards the end of the financial year the Group launched a new
market-facing business unit called AB Simulation, which encompasses
our physics-based simulation software, rFpro, the existing AB
Dynamics simulator product line and the newly-acquired Ansible
Motion simulator technology to provide a market-leading range of
products to address the growing automotive simulation market.
Following our initial investments in 2022, the Group has
continued to build bench strength and capabilities in the senior
management team with the appointments of a Chief Operating Officer,
President Asia Pacific and North America, a Managing Director for
AB Simulation and a Group Operational Excellence Director. In
addition to these senior hires the Group is continuing to build out
the wider capabilities of its employees and initiated a
Professional Development Programme for leaders of the future.
The development of our Group-wide ERP system progressed
significantly during the year, with the first modules having gone
live in the UK and the remaining implementation for the wider Group
due to commence during 2023.
Acquisitions
Shortly after the financial year end, the Group acquired Ansible
Motion Limited, a UK-based provider of advanced simulator solutions
to the automotive market, for initial consideration of GBP19.2m
with deferred contingent consideration of up to GBP12.0m. The
initial consideration comprised cash of GBP16.0m and GBP3.2m of new
ordinary shares in AB Dynamics issued to the vendors.
Ansible Motion designs and manufactures high end motion platform
systems for Driver-in-the-Loop development of vehicle dynamics,
ADAS and automated systems and already uses the Group's rFpro
software for its physics-based virtual environments. The Ansible
Motion range of driving simulators complements the existing product
offering from AB Dynamics and provides a comprehensive range of
simulators that address a wider range of simulator applications.
Ansible Motion will be integrated into the newly-formed AB
Simulation business unit.
During the prior year, the Group acquired VadoTech Group, a
leading supplier of testing services in the Asia Pacific region.
Since acquisition VadoTech has performed in line with the Board's
expectations and has been fully integrated into the Group,
reporting into the President Asia Pacific and North America based
in the newly-formed Singapore regional operating hub.
Acquisitions continue to form a key part of the long-term
strategic development of the Group and we operate a continuous
process to identify and deliver acquisition opportunities. The
current long-term pipeline remains positive and we expect to
continue to deliver further value-enhancing acquisitions.
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 and adjusted
earnings per share.
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.
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.
A reconciliation of statutory measures to adjusted measures is
provided below:
2022 2021
Adjusted Adjustments Statutory Adjusted Adjustments Statutory
Operating profit (GBPm) 12.7 (7.5) 5.2 10.8 (6.6) 4.2
Operating margin (%) 15.8 (9.3) 6.5 16.6 (10.2) 6.4
Profit before tax (GBPm) 12.4 (7.5) 4.9 10.4 (6.6) 3.8
Taxation (GBPm) (2.2) 1.2 (1.0) (1.9) 1.1 (0.8)
Profit after tax (GBPm) 10.2 (6.3) 3.9 8.5 (5.5) 3.0
Diluted earnings per share (pence) 44.5 (27.4) 17.1 37.4 (24.3) 13.1
Cash flow from operations ( GBPm) 20.7 (2.0) 18.7 16.0 (1.7) 14.3
The adjustments to operating profit and profit before tax
comprise:
2022 2021
GBPm GBPm
Amortisation of acquired intangibles 5.5 4.4
Acquisition related costs 0.3 0.8
ERP development costs 1.7 1.4
Adjustments 7.5 6.6
-------------------------------------- ----- -----
The tax impact of these adjustments was a credit of GBP1.2m. The
cashflow impact of the adjustments was an outflow of GBP2.0m and
related to the acquisition costs and ERP costs.
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). During the year, ROCE has
increased from 11.5% to 14.2% as a result of the full year
contribution from the investment in VadoTech, acquired in the
previous year.
Research and development
While research and development forms a significant part of the
Group's activities, a significant proportion relates to specific
customer programmes which are included in the cost of the product.
Development costs of GBP1.7m (2021: GBP1.2m) 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 written off to the income statement as incurred,
totalled GBP0.4m (2021: GBP0.5m).
Foreign currency exposure
Foreign exchange translation has provided a minor headwind on
revenue and profit, with the movement in the stronger US dollar
offset by the weaker Euro and Yen. On a constant currency basis,
restating the current year at 2021 average rates, revenue would
have been GBP0.7m higher and adjusted operating profit GBP0.1m
higher.
Dividends
The Board is recommending a final divided of 3.54p per share
giving a total dividend for the year of 5.30p per share, which is
an increase of 10% over the prior year, continuing the Board's
progressive dividend policy.
Summary and outlook
The Group has delivered an outstanding performance against a
challenging market backdrop which includes the ongoing impacts of
inflation and supply chain constraints. The financial results show
further strong progress, with record levels of order intake,
revenue, adjusted EBITDA and cash generation. In parallel, the
Group has further strengthened in terms of strategic positioning
through both organic investments and acquisitions and has now fully
built out the senior leadership team and operating
capabilities.
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 new technologies to diversify the business into attractive
adjacent markets through ABD Solutions.
Momentum into the early part of the new financial year has been
encouraging, supported by a solid order book providing good
visibility through the first half. Whilst being mindful of ongoing
supply chain disruption and wider economic uncertainty, the Board
remains confident that the Group will make further financial and
strategic progress this year and its expectations for FY 2023 are
unchanged.
Our market drivers both in our automotive business and in ABD
Solutions remain strong. Despite some potential short-term
headwinds relating to global macroeconomic conditions, this
backdrop, along with the Group's recent investments in capability
and new products, provides confidence of delivering continued
progress in 2023 and beyond.
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 2022. 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 issuer 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, is
fair, balanced and understandable, and provides 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 23 November 2022 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 2022
2022 2021
Adjusted Adjustments Statutory Adjusted Adjustments Statutory
Note GBP'000 GBP000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2 80,305 - 80,305 65,380 - 65,380
Cost of sales (34,089) - (34,089) (28,269) - (28,269)
Gross profit 46,216 - 46,216 37,111 - 37,111
General and
administrative expenses (33,473) (7,514) (40,987) (26,288) (6,630) (32,918)
---------- ------------- ----------- ---------- -------------- ------------
Operating profit 12,743 (7,514) 5,229 10,823 (6,630) 4,193
------------------------- ------- ---------- ------------- ----------- ---------- -------------- ------------
Operating profit is
analysed as:
Before depreciation and
amortisation 16,363 (1,998) 14,365 13,500 (2,198) 11,302
Depreciation and
amortisation (3,620) (5,516) (9,136) (2,677) (4,432) (7,109)
Operating profit 12,743 (7,514) 5,229 10,823 (6,630) 4,193
------------------------- ------- ---------- ------------- ----------- ---------- --------------
Finance expense (159) - (159) (76) - (76)
Other finance expense (215) - (215) (332) - (332)
Profit before tax 12,369 (7,514) 4,855 10,415 (6,630) 3,785
Tax expense (2,182) 1,236 (946) (1,895) 1,095 (800)
---------- ------------- ----------- ---------- -------------- ------------
Profit for the year 10,187 (6,278) 3,909 8,520 (5,535) 2,985
---------- ------------- ----------- ---------- -------------- ------------
Other comprehensive
income/(expense)
Items that may be
reclassified to
consolidated
income statement:
Cash flow hedges (93) - (93) (31) - (31)
Exchange gain/(loss) on
foreign currency
net investments 3,574 - 3,574 (614) - (614)
---------- ------------- ----------- ---------- -------------- ------------
Total comprehensive
income for the
year 13,668 (6,278) 7,390 7,875 (5,535) 2,340
---------- ------------- ----------- ---------- -------------- ------------
Earnings per share -
basic 6 45.0p (27.7p) 17.3p 37.7p (24.5p) 13.2p
Earnings per share -
diluted 6 44.5p (27.4p) 17.1p 37.4p (24.3p) 13.1p
AB Dynamics plc
Consolidated statement of financial position
As at 31 August 2022
2022 2021
GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 23,818 22,221
Acquired intangible assets 23,665 28,282
Other intangible assets 2,971 1,577
Property, plant and equipment 25,708 25,815
Right-of-use assets 876 913
---------
77,038 78,808
--------- ----------
Current assets
Inventories 13,611 6,771
Trade and other receivables 13,782 15,500
Contract assets 3,917 4,269
Taxation 882 1,443
Cash and cash equivalents 30,141 23,282
--------- ----------
62,333 51,265
--------- ----------
Assets held for sale 1,893 1,893
--------- ----------
LIABILITIES
Current liabilities
Trade and other payables 16,053 10,933
Contract liabilities 5,787 3,568
Derivative financial instruments 123 31
Short-term lease liabilities 628 456
Deferred consideration - 4,929
--------- ----------
22,591 19,917
--------- ----------
Non-current liabilities
Deferred tax liabilities 6,397 6,552
Long-term lease liabilities 315 511
--------- ----------
6,712 7,063
--------- ----------
Net assets 111,961 104,986
--------- ----------
SHAREHOLDERS' EQUITY
Share capital 226 226
Share premium 62,260 62,210
Other reserves 1,142 (2,339)
Retained earnings 48,333 44,889
--------- ----------
Total equity 111,961 104,986
AB Dynamics plc
Consolidated statement of changes in equity
For the year ended 31 August 2022
Share capital Share Other reserves Retained Total equity
premium earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 September 2020 226 61,736 (1,694) 41,956 102,224
Share based payments - - - 1,139 1,139
Total comprehensive
income - - (645) 2,985 2,340
Deferred tax on share
based payments - - - 165 165
Dividend paid - - - (1,356) (1,356)
Issue of shares - 474 - - 474
At 31 August 2021 226 62,210 (2,339) 44,889 104,986
-------------- --------- --------------- ---------- -------------
Share based payments - - - 750 750
Total comprehensive
income - - 3,481 3,909 7,390
Deferred tax on share
based payments - - - (84) (84)
Dividend paid - - - (1,131) (1,131)
Issue of shares - 50 - - 50
At 31 August 2022 226 62,260 1,142 48,333 111,961
-------------- --------- --------------- ---------- -------------
AB Dynamics plc
Consolidated cash flow statement
For the year ended 31 August 2022
2022 2021
GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 4,855 3,785
Depreciation and amortisation 9,136 7,109
Finance expense 374 408
Share based payment 795 1,240
Acquisition costs 290 304
--------------------- ----------
Operating cash flows before changes in
working capital 15,450 12,846
(Increase)/decrease in inventories (6,889) 2,409
(Decrease)/increase in trade and other
receivables 1,981 (3,913)
Increase in trade and other payables 8,140 2,956
--------------------- ----------
Cash flows from operations 18,682 14,298
------------------------------------------------- --------------------- ----------
Adjusted cash flows from operations 20,652 15,961
Cash impact of adjusting items (1,970) (1,663)
--------------------- ----------
Cash flows from operations 18,682 14,298
------------------------------------------------- --------------------- ----------
Finance costs paid (90) (139)
Income tax (paid)/received (684) 1,062
Net cash flows from operating activities 17,908 15,221
--------------------- ----------
Cash flows used in investing activities
Acquisition of businesses (5,114) (14,329)
Purchase of property, plant and equipment (2,098) (5,536)
Capitalised development costs and purchased
software (1,711) (1,104)
Net cash used in investing activities (8,923) (20,969)
--------------- ----------
Cash flows (used in)/generated from financing
activities
Net movements in loans - (493)
Maturity of fixed term deposits - 5,000
Dividends paid (1,131) (1,356)
Proceeds from issue of share capital 50 474
Repayment of lease liabilities (964) (656)
Net cash (used in)/generated from financing
activities (2,045) 2,969
--------------- ----------
Net increase/(decrease) in cash, cash equivalents
and bank overdrafts 6,940 (2,779)
Cash, cash equivalents and bank overdrafts
at beginning of the year 23,282 26,183
Effects of exchange rate changes (81) (122)
Cash, cash equivalents and bank overdrafts
at end of the year 30,141 23,282
=============== ==========
AB Dynamics plc
Notes to the consolidated financial statements
For the year ended 31 August 2022
1. Basis of preparation
The Company is a public limited company limited by shares and
incorporated under the UK Companies Act. 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
and services 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, as well as automation of vehicles used for other
applications, such as mining and defence.
The annual financial statements of the Group are prepared in
accordance with in accordance with UK-adopted international
accounting standards and applicable law . A copy of the statutory
accounts for the year ended 31 August 2021 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.
Certain new standards, amendments to standards and
interpretations are not yet effective for the year ended 31 August
2022 and have therefore not been applied in preparing the annual
financial statements.
Going concern basis of accounting
The Group's activities and an outline of the developments taking
place in relation to its products, services and marketplace are
considered in the Chief Executive's review. The principal risks and
uncertainties and mitigations are included in the strategic
report.
Note 20 to the consolidated financial statements sets out the
Company's financial risks and the management of capital risks.
The Directors have assessed the principal risks, 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 from supply chain disruption
-- An increase in cash collection cycle
-- An increase in input costs resulting in reduction in gross margins to 45%.
At 31 August 2022 the Group had GBP30.1m of cash and GBP15.0m
undrawn revolving credit facility. Even after the post-year-end
acquisition of Ansible Motion for GBP16.0m of cash, 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 twelve 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.
2. Segment information
The Group derives revenue from the sale of its advanced
measurement, simulation and testing products derived in assisting
the global transport market in the laboratory and on the test
track. The income streams are all derived from the utilisation of
these products which, in all aspects except details of revenue, are
reviewed and managed together within the Group and as such are
considered to be the only segment.
The operating segment is 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
(CODM).
Analysis of revenue by country of destination:
2022 2021
GBP'000 GBP'000
United Kingdom 5,459 4,449
Rest of Europe 13,723 11,352
North America 19,466 15,884
Asia Pacific 40,941 32,717
Rest of World 716 978
--------- -----------
80,305 65,380
--------- -----------
One customer individually represents 12.5% of total revenue for
the year ended 31 August 2022 (2021: no customer individually
represented 10% or more 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:
2022 2021
GBP'000 GBP'000
United Kingdom 39,565 41,174
Rest of Europe 1,262 1,009
North America 17,084 15,522
Asia Pacific 19,127 21,103
--------- -----------
77,038 78,808
--------- -----------
Revenues are disaggregated as follows:
2022 2021
GBP'000 GBP'000
Revenue by sector
Track testing 64,743 49,680
Laboratory testing and simulation 15,562 15,700
--------- -------------
80,305 65,380
--------- -------------
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.
2022 2021
GBP'000 GBP'000
Amortisation of acquired intangibles 5,516 4,432
Acquisition related costs 328 840
ERP development costs 1,670 1,358
7,514 6,630
-------------------------------------- --------- -----------
Amortisation of acquired intangibles
The amortisation relates to the acquisition of VadoTech Group on
3 March 2021 and the businesses acquired in 2019, DRI and
rFpro.
Acquisition related costs
The costs in the current year relate to the acquistion of
Ansible Motion Limited which completed on 20 September 2022 after
the year end.
The costs incurred during 2021 relate to the acquisition of the
VadoTech Group as well as staff retention payments to the employees
of rFpro.
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.
Tax
The tax impact of these adjustments was as follows: amortisation
GBP0.8m (2021: GBP0.7m), acquisition related costs GBP0.1m (2021:
GBP0.1m) and ERP development costs GBP0.3m (2021: GBP0.3m).
Net cash
The reconciliation of cash and cash equivalents to net cash is
as follows:
2022 2021
GBP'000 GBP'000
Cash and cash equivalents 30,141 23,282
Lease liabilities (943) (967)
29,198 22,315
--------------------------- --------- -----------
4. Tax
The statutory effective rate of tax for the year is higher than
(2021: higher than) the standard rate of corporation tax in the UK
of 19% (2021: 19%).
The adjusted effective tax rate, adjusting both the tax charge
and the profit before tax is 17.7% (2021: 18.3%), the reduction
being mainly due to an increase in Patent Box relief.
5. Dividend paid
2022 2021
GBP'000 GBP'000
Final 2020 dividend paid of 4.4p
per share - 994
Interim 2021 dividend paid of
1.6p per share - 362
Final 2021 dividend paid of 3.2p 733 -
per share
Interim 2022 dividend paid of 398 -
1.8p per share
1,131 1,356
---------------------------------- --------- -----------
The Board has proposed a final dividend of 3.54p per share
totalling GBP735,000. An interim dividend was paid of 1.76p per
share totalling GBP398,000. If approved, the final dividend will be
paid on 27 January 2023 to shareholders on the register on 30
December 2022, being the associated Record Date. The shares will be
marked ex-dividend on 29 December 2022.
6. 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:
2022 2021
GBP'000 GBP'000
Profit for the year attributable
to owners of the Group 3,909 2,985
Adjusted profit after tax 10,187 8,520
Weighted average number of shares
('000)
Basic 22,625 22,602
Diluted 22,908 22,782
Earnings per share
Basic 17.3p 13.2p
Diluted 17.1p 13.1p
Adjusted basic 45.0p 37.7p
Adjusted diluted 44.5p 37.4p
7. Other reserves
Merger Reconstruction Translation Hedging Total
relief reserve reserve reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 September 2020 11,390 (11,284) (1,800) - (1,694)
Total comprehensive
expense - - (614) (31) (645)
--------- --------------- ------------ --------- -----------
At 31 August 2021 11,390 (11,284) (2,414) (31) (2,339)
Total comprehensive
income - - 3,574 (93) 3,481
--------- --------------- ------------ --------- -----------
At 31 August 2022 11,390 (11,284) 1,160 (124) 1,142
--------- --------------- ------------ --------- -----------
8. Foreign exchange
The foreign exchange rates applied during the year were:
2022 2021
----- -----
Year end rate
US dollar 1.16 1.37
Euro 1.15 1.16
Yen 161 151
----- -----
Average rate
US dollar 1.31 1.36
Euro 1.19 1.15
Yen 158 145
----- -----
9. Principal risks
The principal risks and uncertainties impacting the Group are
described on pages 56-58 of our Annual Report 2022. They include:
supply chain disruptions, downturn or instability in major
geographic markets or market sectors (including inflation and
pandemics), loss of major customers and change in customer
procurement processes, failure to deliver new products, dependence
on external routes to market, acquisitions 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,
credit risk and intellectual property/patents.
10. Post balance sheet events
On 20 September 2022, the Group acquired 100% of Ansible Motion
Limited for initial consideration of GBP19.2m with deferred
consideration of up to GBP12.0m.
The initial consideration comprised cash of GBP16.0m and GBP3.2m
of new ordinary shares in AB Dynamics plc issed to the vendors. The
contingent consideration is subject to certain performance criteria
being achieved for the year ending 31 August 2023.
The book value of acquired assets and liabilities at the date of
acquisition was GBP4.1m. The Group is currently in the process of
determining the fair values of the assets and liabilities acquired.
Based on unaudited accounts for the year ended 31 March 2022,
Ansible Motion generated revenue of GBP8.0m (2021: GBP5.4m),
earnings before interest, tax, depreciation and amortisation
(EBITDA) of GBP1.9m (2021: GBP0.8m) and operating profit of GBP1.8m
(2021: GBP0.7m).
Acquistion expenses totalled GBP0.5m of which GBP0.3m was
incurred in the year ended 31 August 2022 and is included in
administrative expenses in the consolidated statement of
comprehensive income.
The number of shares issued totalled 258,795 which will increase
the weighted average shares in issue for FY2023 by 243,865
shares.
11. 2022 Annual Report
The Annual Report for the year ended 31 August 2022 will be
posted on the Company's website, www.abdplc.com , on 23 November
2022 and a copy will be posted to shareholders, as required, in
advance of the Company's Annual General Meeting of 11 January
2023.
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END
FR PPGGPGUPPGMP
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