TIDMABDP
RNS Number : 0996R
AB Dynamics PLC
04 March 2021
4 March 2021
AB Dynamics plc
("AB Dynamics", the "Company" or the "Group")
Acquisition of Vadotech Group
AB Dynamics (AIM: ABDP), the designer, manufacturer and supplier
of advanced testing systems and measurement products to the global
automotive market, is pleased to announce that, after thorough due
diligence, it has completed the acquisition of Vadotech Pte Ltd and
Zynit Pte Ltd (collectively "Vadotech Group") for total cash
consideration of up to EUR26.0 million (the "Acquisition").
Founded in 1997 and with 140 employees, the Vadotech Group is a
leading supplier of testing services in the Asia Pacific region,
headquartered in Singapore with key operations in China, Germany
and Japan. Vadotech Group provides comprehensive automotive testing
services including evaluations of ADAS systems, infotainment,
connectivity, electric vehicle performance and charging and other
associated functions. The business has long standing relationships
with German automotive OEMs, providing vehicle testing services to
local operations, underpinned by long term customer framework
agreements. Their primary operation is based in Beijing, China
where they have a 60,000ft(2) testing centre with a wide range of
testing capabilities.
Rationale for the Acquisition
The Acquisition supports a number of the Group's stated
strategic priorities including:
-- Expanding the Company's international footprint by providing
a sales and technical facility in the strategically important
Chinese market;
-- Establishing a new Asia Pacific divisional operating hub in
Singapore to manage the territory, drive additional cross selling
of Group products in the region and identify and deliver further
strategically important growth initiatives;
-- Further increasing the Group's visibility of future revenue
as Vadotech Group sales are supported by long term customer
framework agreements;
-- Increasing the range of services provided by the Group to
include full vehicle assessments including quality assurance
testing and support to new vehicle R&D programmes;
-- Establishing an electric vehicle and e-mobility technology training centre in Germany; and
-- Opportunity to replicate the Vadotech Group business model in
other territories such as Europe and the USA
Financial Considerations
The Acquisition has been completed on a cash free, debt free
basis for an initial cash consideration of EUR17.0 million, funded
from the Company's existing cash resources. Two further conditional
cash payments of up to EUR3.0 million and EUR6.0 million are
subject to certain performance criteria being achieved for the year
ended 31 December 2020 and the year ending 31 December 2021,
respectively. The Vadotech Group is being acquired from its two
shareholders, Mr Frank Beuler and Mr Sebastian Rupprecht. Mr
Rupprecht will continue with the business as Managing Director and
Mr Beuler will continue to support the business for an initial
transition period.
The Vadotech Group has a strong record of profitable, and cash
generative growth. Based on unaudited accounts, in the year ended
31 December 2020 Vadotech Group generated sales revenue of EUR14.2
million (2019: EUR14.5 million), earnings before interest, tax,
depreciation and amortisation ('EBITDA') of EUR4.0 million (2019:
EUR4.7 million) and adjusted operating profit of EUR3.7 million
(2019: EUR4.2 million). Net assets at 31 December 2020 were EUR4.1
million.
The Acquisition provides a significantly larger physical
presence for AB Dynamics in Asia Pacific and the Group will invest
approximately GBP1.0 million in the integration to establish a
strong regional hub for the wider business. The Board expects that
the Acquisition will be modestly earnings enhancing in the current
year, with a more significant contribution in the first full year
and beyond.
Current trading and financial position
Trading conditions for the Group were as anticipated through the
latter part of the first half, with performance for the six months
ended 28 February 2021 in line with the Board's expectations. With
continued recovery from the disruption to customer testing
operations arising from the pandemic across the Group's major
territories, the Board remains confident in the Group's prospects
for the year. Cash generation has also continued to be positive,
with net cash at 28 February 2021 of GBP33.0 million (29 February
2020: GBP34.2 million, 31 August 2020: GBP30.0 million).
Dr James Routh, Chief Executive Officer, said:
"The Acquisition of Vadotech Group supports the Group's
strategic initiatives by broadening the scope of the Group's
product and services offering, further expanding our reach into new
strategically important territories and increasing the range of
testing services, which in turn increases visibility of future
revenue.
"Vadotech Group has an outstanding reputation for providing
excellence in full vehicle testing services to its German OEM
customer base and we look forward to expanding this further, both
within existing territories and into new attractive markets.
"We expect the Acquisition, together with the establishment of
the Asia Pacific divisional operating hub, to provide us with an
excellent platform for further growth and we are pleased to welcome
the Vadotech Group team to AB Dynamics."
Certain information contained in this announcement would have
constituted inside information (as defined by Article 7 of
Regulation (EU) No 596/2014) ("MAR") prior to its release as part
of this announcement and is disclosed in accordance with the
Company's obligations under Article 17 of those Regulations.
The person responsible for arranging the release of this
information is Felicity Jackson, 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 418 8900
Mike Bell
Ed Allsopp
Tulchan Communications 0207 353 4200
James Macey White
Matt Low
Laura Marshall
Appendix
Vadotech Pte Ltd is a service provider to Zynit Pte Ltd which
has the relationship with the end customer. The 31 December 2020
results of the acquired sub-groups are as follows:
EUR'm Zynit Pte Vadotech Pte Vadotech Group
Ltd Ltd
Revenue 12.9 1.3 14.2
---------- ------------- ---------------
Adjusted operating profit 4.2 (0.5) 3.7
---------- ------------- ---------------
Net assets 3.2 0.8 4.1
---------- ------------- ---------------
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END
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