TIDMABDP
RNS Number : 3336T
AB Dynamics PLC
24 November 2021
24 November 2021
AB Dynamics plc
Final Results for the Year Ended 31 August 2021
"Robust performance supported by recovering demand and strategic
progress"
AB Dynamics plc ("AB Dynamics", the "Company" or the "Group"),
the designer, manufacturer and supplier of advanced testing systems
and measurement products to the global automotive market, is
pleased to announce its final results for the year ended 31 August
2021.
Audited Audited
2021 2020
GBPm GBPm
Revenue 65.4 61.5 +6%
Gross margin 56.8% 58.4% (160 bps)
Adjusted operating profit(1) 10.8 11.3 (4%)
Adjusted operating margin(1) 16.6% 18.4% (180 bps)
Statutory operating profit(2) 4.2 4.8 (12%)
Adjusted cash flow from
operations(1) 16.0 6.9 +131%
Net cash 22.3 30.0 (26%)
------------------------------- -------- -------- ----------
Pence Pence
Adjusted diluted earnings
per share(1) 37.4 39.9 (6%)
Statutory diluted earnings
per share(2) 13.1 17.8 (26%)
Total dividend per share 4.8 4.4 +10%
------------------------------- -------- -------- ----------
(1) Before amortisation of acquired intangibles, acquisition
related charges and exceptional items. A reconciliation to
statutory measures is given below.
(2) The prior year comparative has been restated to reflect the
write off of previously capitalised ERP development costs on
adoption of the IFRIC update on cloud computing arrangements.
Financial highlights
-- Strong second half performance, managing supply chain
disruption and currency headwinds effectively in order to meet
strengthening demand during the period
-- Continued recovery in the Group's markets translated into
improved order intake with positive book to bill ratio across both
divisions
-- Revenue for the first half of the year was broadly comparable
to H2 2020 with COVID-19 impact continuing into the current
year
-- Track testing revenue decreased by 4%, impacted by COVID-19
disruption to customer testing activity, although driving robot and
Advanced Driver Assistance System (ADAS) platform revenue recovered
well during the second half
-- Laboratory testing and simulation revenues increased by 62%
as a result of significant growth in SPMM and simulation revenues
following the deferments in the prior year and successful sales
campaigns
-- Reduction in adjusted operating margins to 16.6% driven by
product mix and continued strategic investment in capability to
support long-term growth drivers
-- Significant cash generation of GBP16.0m (2020: GBP6.9m)
leaving net cash at year end of GBP22.3m (2020: GBP30.0m) after
funding the acquisition of Vadotech and investing GBP6.6m in
capital expenditure in the period
-- Proposed final dividend of 3.2p per share, with total
dividend of 4.8p per share (2020: 4.4p per share) reflecting the
Board's confidence in the Group's financial position and
prospects
Operational and strategic highlights
-- Further progress made on implementation of strategic
initiatives to enhance commercial and operational capability and
provide a platform for sustainable long-term growth
-- New product development continued as planned with successful
launches including high speed ADAS platforms and a next generation
simulator
-- Growth in recurring revenue to 35%, up from 28% of Group
revenue through acquired businesses and increased sales of service
and support contracts
-- Solid performance from Vadotech which was acquired in the second half of the year
-- Significant work undertaken to evolve the next phase of the
Group's strategy, targeting diversification alongside the
established pillars and opening up new markets beyond
automotive
-- Post year end launch of ABD Solutions, a new business unit
focused on providing retrofit solutions that enable the automation
of conventional off-road vehicle fleets rapidly and cost
effectively
Current trading and outlook
-- Q1 trading to date in line with H2 2021 exit rate
-- Customer operations remain disrupted in some locations, but
underlying demand recovery continues to strengthen with sustainable
long-term structural and regulatory growth drivers remaining
intact
-- Supply chain disruption expected to persist into the current
year, with further operational initiatives in train to meet
demand
-- Progress in development of ABD Solutions with investment
required during 2022 to generate incremental growth opportunities
thereafter
-- Continued innovation and capability investment generating positive commercial momentum
-- Well placed and sufficiently invested to capitalise on opportunities
There will be a presentation for analysts this morning at 9.30am
at the London Stock Exchange. 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 another year of strong performance,
despite the ongoing impacts of COVID-19, particularly in the first
half of the year. The second half delivered record levels of order
intake, revenue and cash generation, which provides a strong
foundation for continued growth in 2022.
Against the backdrop of continued market uncertainty, the Group
continued to invest in all areas of the business, further
supporting our ambitious growth plans. During the year, we made
demonstrable progress in evolving the Group's strategic direction,
both with the acquisition of Vadotech and also through the launch
of ABD Solutions, a major new growth initiative to diversify the
business. The Group also continued to strengthen the operational
and commercial platform of the business through investing in new
product development, capabilities and the senior management
team.
Our market drivers remain strong. Against that background and
based on the recent track record of strong order intake and
continued strategic investment, the Board is confident of
delivering progress during 2022 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
Laura Marshall
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 provider of
advanced products for testing and verification of Advanced Driver
Assistance Systems ("ADAS") technology, autonomous vehicle
development and vehicle dynamics to the global automotive research
and development sector.
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
The Group delivered a robust performance against continued
macroeconomic challenges due to the ongoing COVID-19 pandemic, in
what has been another year of fluctuating market conditions and
change.
The performance during the year was split by two markedly
differing halves. As expected, the first half performance was
characterised by ongoing market impacts from COVID-19, followed by
an exceptional second half performance with the Group delivering
record levels of order intake and revenue for a half year period,
despite certain supply chain constraints and the impact of staff
isolation in the UK.
The Group continued to deliver progress against our stated
strategic priorities, with the acquisition of Vadotech delivering
both expansion of our international footprint and increasing our
service capability. We have also expanded our strategy and put in
place plans to diversify the business into large, attractive
adjacent markets through our new business unit, ABD Solutions.
The current market conditions and strong second half order
intake performance provide a solid platform for continued growth
and performance during 2022.
Financial performance
The Group results show revenue growth of 6% to GBP65.4m (2020:
GBP61.5m) with the significant majority of GBP38.1m delivered in
the second half of the financial year, which is the highest
half-year revenue during the Group's history. Despite the adverse
impacts of UK-based staff isolations, supply chain constraints and
adverse foreign exchange impacts, the Group second half revenue
growth of 42% (H2 2020: GBP26.8m) was strong, driven by ADAS
platforms, laboratory testing and simulation sales and the
acquisition of Vadotech and is 19% higher than the comparable
period in the pre-COVID-19 financial year (H2 2019: GBP32.1m).
Organic revenue decreased by 3%, or 1% on a constant currency
basis, with the first half of the prior year being a particularly
strong comparative, having been concluded before the impact of
COVID.
Excluding the distortive H1 comparative, organic revenue has
improved, increasing from GBP26.8m in H2 2020 to GBP32.2m in H2
2021, growth of 20%.
The Group continues to increase the proportion of recurring
revenue which grew to 35% (2020: 28%) through a higher proportion
of sales relating to software and services and further enhanced by
the recent acquisition of Vadotech Group.
Gross margins reduced by 160 bps to 56.8% (2020: 58.4%),
impacted by a higher proportion of large capital equipment revenues
in laboratory testing and simulation, which are lower margin than
the Group's other products and services.
Adjusted operating profit decreased 4% to GBP10.8m (2020:
GBP11.3m), a reduction in adjusted operating margin of 180 bps to
16.6% (2020: 18.4%). The reduction in operating margin was impacted
by the dilution of the gross margin and continued investment to
further strengthen the Group's operational and commercial platform
through investment in senior management, people and systems.
The Group delivered strong adjusted operating cash flow of
GBP16.0m with the net cash position at year end of GBP22.3m (2020:
GBP30.0m) underpinning a robust balance sheet, despite the
acquisition of Vadotech Group for gross consideration of GBP17.3m
and capital investment in our new Engineering Design Centre, an
expanded test track facility in California and ongoing new product
development, totalling GBP6.6m.
Net finance costs were GBP0.4m (2020: GBP0.4m), with lease
interest of GBP0.1m and the unwinding of the discounted value of
the deferred consideration on Vadotech of GBP0.3m.
This left adjusted profit before tax of GBP10.4m (2020:
GBP10.9m).
The Group adjusted tax charge totalled GBP1.9m (2020: GBP1.9m),
an adjusted effective tax rate of 18.2% (2020: 17.7%). The
effective tax rate is lower than the current UK corporation tax
rate due to allowances for research and development and patent
box.
Adjusted diluted earnings per share were 37.4p (2020: 39.9p), a
decrease of 6%.
Statutory operating profit decreased by 12% to GBP4.2m (2020:
GBP4.8m) and after net finance costs of GBP0.4m (2020: GBP0.4m),
statutory profit before tax decreased by 14% from GBP4.3m to
GBP3.8m, giving statutory basic earnings per share of 13.2p (2020:
17.9p). The statutory tax charge was GBP0.8m (2020: GBP0.3m). A
reconciliation of statutory to underlying non-GAAP financial
measures is provided below.
Sector review
The track testing sector delivered revenue of GBP49.7m (2020:
GBP51.8m), a 4% reduction on the prior year and a 2% reduction at
constant currency. The first half of the financial year showed a
continued impact of COVID-19 with revenues at GBP20.9m (H1 2020:
GBP29.6m), with a strong recovery in second half revenues to
GBP28.8m (H2 2020: GBP22.2m).
The track testing performance was characterised by a reduction
in sales of driving robots, ADAS platforms and track test services
at Dynamic Research Inc (DRI), offset by the initial contribution
from road-based testing at Vadotech.
Driving robot sales reduced by 20% to GBP16.9m (2020: GBP21.1m),
particularly in the second half, as lower H1 order intake impacted
H2 revenues. Order intake for driving robots recovered strongly in
H2 with full- year order intake significantly higher than 2020. The
Group expects a moderate growth in driving robots once new
regulatory requirements for new ADAS technologies are released.
Revenues in ADAS platforms reduced 6% to GBP22.7m (2020:
GBP24.1m) due to the weaker first half of the financial year with
revenue recovering strongly in H2 to GBP13.1m (H1 2021: GBP9.6m).
Demand for ADAS platforms, particularly the LaunchPad family of
products, continues to build, in particular the Group's new
LaunchPad 80 product used for testing higher speed objects such as
motorcycles. The Group also launched the GST 120 during the year,
providing the ability to test up to 120 kph and providing enhanced
deceleration capabilities through its anti-lock braking system.
The 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.
Revenue related to the provision of testing services increased
53% to GBP10.1m (2020: GBP6.6m) due to the impact of the
acquisition of Vadotech Group in March 2021, partly offset by a
weaker performance at DRI. Track testing operations at DRI were
impacted in H1 by the COVID-19 pandemic preventing physical testing
taking place and the change in the US government delayed the award
of new contracts from the government agency NHTSA.
The laboratory testing and simulation sector delivered strong
overall revenue growth of 62% to GBP15.7m (2020: GBP9.7m), through
significant growth of 28% in Suspension Parameter Measurement
Machine (SPMM) sales revenue and a very strong simulation
performance, growing by 98%. Many of the H2 2020 deferred orders
for larger capital items such as SPMM and Advanced Vehicle Driving
Simulator (aVDS) were received, which supported the strong revenue
performance.
The growth in sales revenue in laboratory testing equipment
(including SPMM) of 28% to GBP6.4m (2020: GBP5.0m) was due to
continued strong demand from China, with order intake continuing
through H2 to support the delivery of FY 2022 revenue. The
manufacture of the first ANVH test machine to a major automotive
OEM is nearing completion, which contributed to the laboratory
testing and simulation sector performance.
The simulation sector performed very well with revenue growth of
98% to GBP9.3m (2020: GBP4.7m) due to the delivery of several aVDS
simulator systems and a recovery in revenues at rFpro following the
delays to the motorsport season in FY 2020. The outlook for
simulation is robust with a strong order book for aVDS simulators
and the market for rFpro simulation software supporting continued
growth.
Strategic progress
The Group continues to make good progress against its stated
core strategic priorities, as well as expanding the strategy to
include diversification and further integrating ESG as a core
tenet.
Following a comprehensive review of the potential market for
leveraging our core technologies, the Group established ABD
Solutions, a new business unit focused on the application of
robotics technology and control in attractive adjacent markets to
automate selected vehicle applications. Initial market sectors for
ABD Solutions are mining, agriculture, materials handling and
defence applications.
It is important to emphasise that this new business unit is
incremental to our existing business and our previously stated
strategic plans around the core business remain firmly in place.
During the year, we continued to invest in both R&D and
capabilities to expand this attractive core market. AB Dynamics
completed the build and fit out of the new Engineering Design
Centre in the UK, housing the engineering teams of AB Dynamics, a
simulation development area and demonstration suite, laboratories
and prototyping facilities. A range of new products were launched
to market, in particular, the LaunchPad 80, Guided Soft Target 120
and aVDS Mk2. All new product launches have gained significant
market traction and provided a strong contribution to the recent
growth in order intake.
Significant ongoing investment has been made in building the
bench strength and capabilities in senior management. During the
year, the Group established a divisional management structure, with
the recruitment of senior regional leadership, and further build
out of the corporate team with the appointment of a Chief Strategy
Officer. Additional investments have been made at all levels of
management to ensure solid foundations are established for our
ambitious growth plans.
Acquisitions
During the second half of the year, the Group acquired Vadotech
Group for a maximum consideration of up to EUR26m. Vadotech Group
is a leading supplier of testing services in the Asia Pacific
region, headquartered in Singapore with key operations in China,
Japan and Germany. Vadotech Group expands the range of services
offered by the Group into full vehicle assessments, particularly to
German OEMs, under long-term customer framework agreements and has
established an electric vehicle and e-mobility training centre in
Germany. The acquisition provided a strategically important
footprint in the Asia Pacific region, allowing the introduction of
our new divisional operating hub in Singapore. Vadotech Group has
performed well since acquisition and in line with the Board's
expectations.
Acquisitions have and will continue to be a significant part of
our overall strategy.
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 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:
2021 2020
Statutory Adjustments Adjusted Statutory* Adjustments * Adjusted
Operating profit (GBPm) 4.2 6.6 10.8 4.7 6.6 11.3
Operating margin (%) 6.4 10.2 16.6 7.7 10.7 18.4
Profit before tax (GBPm) 3.8 6.6 10.4 4.3 6.6 10.9
Taxation (GBPm) (0.8) (1.1) (1.9) (0.3) (1.6) (1.9)
Profit after tax (GBPm) 3.0 5.5 8.5 4.0 5.0 9.0
Diluted earnings per share (pence) 13.1 24.3 37.4 17.8 22.1 39.9
Cash flow from operations 14.3 1.7 16.0 6.2 0.7 6.9
The adjustments comprise:
2021 2020
(Restated)*
GBPm GBPm
Amortisation of acquired intangibles 4.4 3.5
Acquisition related (credit) / costs 0.8 (1.9)
ERP development costs 1.4 0.7
Inventory impairment - 3.3
Restructuring - 1.0
-------------------------------------- ----- -------------
Adjustments 6.6 6.6
-------------------------------------- ----- -------------
*Comparatives have been restated following the adoption of IFRIC
update on cloud computing arrangements.
Adjustments totalled GBP6.6m (2020: GBP6.6m), of which GBP4.4m
related to amortisation of acquired intangible assets, GBP0.8m to
acquisition costs and GBP1.4m to ERP development costs, which,
following an update to the accounting standards in relation to
cloud computing arrangements, can no longer be capitalised.
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). However, in the years in which
we acquire businesses or new properties, our capital base grows
disproportionately with profit, therefore the ratio will be
impacted. The current year has been impacted by the acquisition of
Vadotech and commissioning the new Engineering Design Centre,
accounting for the decrease in ROCE in the year from 15.2% in 2020
to 11.5% in 2021.
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 GBP1.2m (2020: GBP0.2m) 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,
total GBP0.5m (2020: GBP0.8m).
Foreign exchange translation has provided a minor headwind on
revenue and profit, with the US dollar, euro and yen all weakening
against sterling. On a constant currency basis, restating the
current year at 2021 average rates, revenue would have been GBP1.5m
higher and adjusted operating profit GBP0.2m higher.
Dividends
The Board is recommending a final divided of 3.24p per share
giving a total dividend for the year of 4.84p per share, which is
an increase of 10% over the prior year, resuming the Board's
progressive dividend policy.
Summary and outlook
The Group has delivered another year of strong performance,
despite the ongoing impacts of COVID-19, particularly in the first
half of the year. The second half delivered record levels of order
intake, revenue and cash generation, which provides a strong
foundation for continued growth in 2022.
Against the backdrop of continued market uncertainty, the Group
continued to invest in all areas of the business, further
supporting our ambitious growth plans. During the year, we made
demonstrable progress in evolving the Group's strategic direction,
both with the acquisition of Vadotech and also through the launch
of ABD Solutions, a major new growth initiative to diversify the
business. The Group also continued to strengthen the operational
and commercial platform of the business through investing in new
product development, capabilities and the senior management
team.
Our market drivers remain strong. Against that background, and
based on the recent track record of strong order intake and
continued strategic investment, the Board is confident of
delivering progress during 2022 and beyond.
Directors' Responsibility Statement on the Annual Report and
Accounts
The responsibility statement below has been prepared in
connection with the Group's full annual report and accounts for the
year ended 31 August 2021. Certain parts thereof are not included
within this announcement.
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare such financial
statements for each financial year. Under that law, they have
elected to prepare the Group financial statements in accordance
with International Financial Reporting Standards (IFRS) adopted
pursuant to Regulation (EC) No 1606/2002 as it applies in the
European Union and in accordance with international accounting
standards in conformity with the requirements of the Companies Act
2006 and applicable law and have elected to prepare the Parent
Company financial statements in accordance with UK Accounting
Standards and applicable law (UK Generally Accepted Accounting
Practice).
Under Company law, the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Parent Company and of
their profit or loss for that year. In preparing each of the Group
and Parent Company financial statements, the Directors are required
to:
-- Select suitable accounting policies and apply them consistently;
-- Make judgments and accounting estimates that are reasonable and prudent;
-- State whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and the Parent
Company will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the parent
company's transactions and disclose with reasonable accuracy at any
time the financial position of the parent company and enable them
to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of
the parent company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
They are further responsible for ensuring that the Strategic
report and the Directors' report and other information included in
the Annual Report and Accounts are prepared in accordance with
applicable law in the United Kingdom.
The maintenance and integrity of the AB Dynamics plc web site is
the responsibility of the Directors; the work carried out by the
auditors does not involve the consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred in the accounts since they were initially
presented on the website.
Legislation in the United Kingdom governing the preparation and
dissemination of the accounts and the other information included in
annual reports may differ from legislation in other
jurisdictions.
We confirm that to the best of our knowledge:
-- the Financial Statements, prepared in accordance with the
relevant financial reporting framework, 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;
-- the Strategic 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; and
-- the Annual Report and Accounts, taken as a whole, are fair,
balanced and understandable and provide the information necessary
for shareholders to assess the Company's position and performance,
business model and strategy.
This responsibility statement was approved by the Board of
Directors on 24 November 2021 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 2021
2021 2020
Adjustments Statutory
Adjusted Adjustments Statutory Adjusted (Restated)* (Restated)*
Note GBP'000 GBP000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2 65,380 - 65,380 61,514 - 61,514
Cost of sales (28,269) - (28,269) (25,592) - (25,592)
Gross profit 37,111 - 37,111 35,922 - 35,922
General and
administrative expenses (26,288) (6,630) (32,918) (24,591) (6,574) (31,165)
---------- ------------- ----------- ---------- ------------- -------------
Operating profit 10,823 (6,630) 4,193 11,331 (6,574) 4,757
------------------------- ------- ---------- ------------- ----------- ---------- ------------- -------------
Operating profit is
analysed as:
Before depreciation and
amortisation 13,500 (2,198) 11,302 13,421 (3,025) 10,396
Depreciation and
amortisation (2,677) (4,432) (7,109) (2,090) (3,549) (5,639)
---------- ------------- ----------- ---------- ------------- -------------
Operating profit 10,823 (6,630) 4,193 11,331 (6,574) 4,757
------------------------- ------- ---------- ------------- ----------- ---------- ------------- -------------
Finance income 15 - 15 218 - 218
Finance expense (91) - (91) (30) - (30)
Other finance expense (332) - (332) (564) - (564)
Profit before tax 10,415 (6,630) 3,785 10,955 (6,574) 4,381
Tax expense (1,895) 1,095 (800) (1,939) 1,580 (359)
---------- ------------- ----------- ---------- ------------- -------------
Profit for the year 8,520 (5,535) 2,985 9,016 (4,994) 4,022
---------- ------------- ----------- ---------- ------------- -------------
Other comprehensive
income
Items that may be
reclassified to
consolidated
income statement:
Cash flow hedges (31) - (31) - - -
Exchange loss on foreign
currency net
investments (614) - (614) (1,978) - (1,978)
Total comprehensive
income for the year 7,875 (5,535) 2,340 7,038 (4,994) 2,044
---------- ------------- ----------- ---------- ------------- -------------
Earnings per share -
basic (pence) 6 37.7p (24.5p) 13.2p 40.1p (22.2p) 17.9p
Earnings per share -
diluted (pence) 6 37.4p (24.3p) 13.1p 39.9p (22.1p) 17.8p
*Restated following adoption of IFRIC update on cloud computing arrangements (see note 1).
AB Dynamics plc
Consolidated statement of financial position
As at 31 August 2021
2020
2021 (Restated)*
GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 22,221 16,170
Acquired intangible assets 28,282 17,623
Other intangible assets 1,565 460
Investment 12 12
Property, plant and equipment 25,815 24,309
Right-of-use assets 913 701
78,808 59,275
Current assets
Inventories 6,771 9,180
Trade and other receivables 15,500 12,844
Contract assets 4,269 2,926
Taxation 1,443 2,962
Fixed term deposits - 5,000
Cash and cash equivalents 23,282 26,183
--------- -------------
51,265 59,095
Assets held for sale 1,893 -
LIABILITIES
Current liabilities
Borrowings - 505
Trade and other payables 10,933 10,387
Contract liabilities 3,568 1,983
Derivative financial instruments 31 -
Short-term lease liabilities 456 473
Deferred consideration 4,929 -
19,917 13,348
Non-current liabilities
Deferred tax liabilities 6,552 2,549
Long-term lease liabilities 511 249
7,063 2,798
Net assets 104,986 102,224
--------- -------------
Shareholders' equity
Share capital 226 226
Share premium 62,210 61,736
Reconstruction reserve (11,284) (11,284)
Merger relief reserve 11,390 11,390
Translation reserve (2,414) (1,800)
Hedging reserve (31) -
Retained earnings 44,889 41,956
--------- -------------
Total equity 104,986 102,224
--------- -------------
*Restated following reclassification of fixed term deposits with
a maturity date of greater than three months at inception and
following adoption of IFRIC update on cloud computing
arrangements.
AB Dynamics plc
Consolidated statement of changes in equity
For the year ended 31 August 2021
Share Share Merger Reconstruction Translation Hedging Retained Total
capital premium relief reserve reserve reserve earnings equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 September
2019 222 60,049 11,390 (11,284) 178 - 38,252 98,807
Share based
payments - - - - - - 1,282 1,282
Total
comprehensive
income - - - - (1,978) - 4,022* 2,044*
Deferred tax
on share based
payments - - - - - - (974) (974)
Dividend paid - - - - - - (626) (626)
Issue of shares 4 1,687 - - - - - 1,691
At 31 August
2020 226 61,736 11,390 (11,284) (1,800) - 41,956 102,224
--------- --------- --------- --------------- ------------ --------- ---------- --------
Share based
payments - - - - - - 1,139 1,139
Total
comprehensive
income - - - - (614) (31) 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 11,390 (11,284) (2,414) (31) 44,889 104,986
--------- --------- --------- --------------- ------------ --------- ---------- --------
*Restated following adoption of IFRIC update on cloud computing
arrangements.
The share premium account is a non-distributable reserve
representing the difference between the nominal value of shares in
issue and the amounts subscribed for those shares.
The reconstruction reserve and merger relief reserve have arisen
as follows:
The acquisition by the Company of the entire issued share
capital of Anthony Best Dynamics Limited in 2013 was accounted for
as a Group reconstruction. Consequently, the assets and liabilities
of the Group were recognised at their previous book values as if
the Company had always been the parent company of the Group.
The share capital for the period covered by these consolidated
financial statements and the comparative periods is stated at the
nominal value of the shares issued pursuant to the above share
arrangement. Any differences between the nominal value of these
shares and previously reported nominal values of shares and
applicable share premium issued by Anthony Best Dynamics Limited
were transferred to the reconstruction reserve.
Retained earnings represent the cumulative value of the profits
not distributed to shareholders but retained to finance the future
capital requirements of the Group.
The items included in the consolidated statement of changes in
equity that relate to transactions with owners are share based
payments, dividends paid and issues of shares.
AB Dynamics plc
Consolidated cash flow statement
For the year ended 31 August 2021
2020
2021 (Restated)*
GBP'000 GBP'000
Cash flows from operating activities
Profit before tax 3,785 4,381
Depreciation and amortisation 7,109 5,639
Finance expense / income 408 (188)
Share based payment 1,240 1,282
Acquisition related costs / (credit) 304 (2,548)
Operating cash flows, before changes in
working capital 12,846 8,566
Decrease in inventories 2,409 1,992
Increase in trade and other receivables (3,913) (565)
Increase / (decrease) in trade and other
payables 2,956 (3,737)
------------------ ------------
Cash flows from operations 14,298 6,256
--------------------------------------------- ------------------ ------------
Cash impact of adjusting items 1,663 654
Adjusted cash flows from operations 15,961 6,910
--------------------------------------------- ------------------ ------------
Interest received 15 218
Finance costs paid (154) -
Income tax received / (paid) 1,062 (2,229)
Net cash flows from operating activities 15,221 4,245
------------------ ------------
Cash flows used in investing activities
Acquisition of businesses (14,329) (2,823)
Purchase of property, plant and equipment (5,536) (7,276)
Capitalised development costs and purchased
software (1,104) (232)
Net cash used in investing activities (20,969) (10,331)
------------------ ------------
Cash flows used in financing activities
Net movements in loans (493) 477
Purchase of fixed term deposits - (20,000)
Maturity of fixed term deposits 5,000 15,000
Dividends paid (1,356) (626)
Proceeds from issue of share capital 474 1,691
Repayment of lease liabilities (656) (592)
Net cash flow generated from / (used in)
financing activities 2,969 (4,050)
------------------ ------------
Net decrease in cash, cash equivalents and
bank overdrafts (2,779) (10,136)
Cash, cash equivalents and bank overdrafts
at beginning of the year 26,183 36,225
Effects of exchange rate changes (122) 94
Cash, cash equivalents and bank overdrafts
at end of the year 23,282 26,183
------------------ ------------
*Restated following reclassification of fixed term deposits
with a maturity date of greater than three months at inception
and following adoption of IFRIC update on cloud computing arrangements.
AB Dynamics plc
Notes to the consolidated financial statements
For the year ended 31 August 2021
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 development of advanced testing and measurement products and
services to the global automotive industry. 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 International Financial Reporting Standards
('IFRS') adopted pursuant to Regulation (EC) No 160612002 as it
applies in the European Union and in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 as applicable to companies reporting under IFRS.
A copy of the statutory accounts for the year ended 31 August 2020
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.
The same accounting policies, presentation and methods of
computation have been followed as those which were applied in the
preparation of the Group's annual statements for the year ended 31
August 2020, with the exception of updating accounting policies to
reflect changes required by the IFRIC update on cloud computing
arrangements which has given rise to a prior year adjustment of
GBP0.7m to reduce other intangible assets and retained
earnings.
Certain new standards, amendments to standards and
interpretations are not yet effective for the year ended 31 August
2021 and have therefore not been applied in preparing the annual
financial statements.
Going concern basis of accounting
The Directors have assessed the principal risks discussed in
note 8, including by modelling a severe but plausible downside
scenario for COVID-19, whereby the Group experiences:
-- A reduction in demand of 25% over the next two financial years
-- 10% increase in operating costs from supply chain disruption
-- Increase in cash collection cycle
-- Increase in input cost resulting in reduction in gross margin to 40%
With GBP23.3m of cash at 31 August 2021 and a GBP15m 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.
2. Segment information
The Group derives revenue from the sale of its advanced
measurement, simulation and testing products derived in assisting
the global automotive industry 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:
2021 2020
GBP'000 GBP'000
United Kingdom 4,449 2,146
Rest of Europe 11,352 14,775
North America 15,884 15,606
Asia Pacific 32,717 27,788
Rest of the World 978 1,199
--------- -----------
65,380 61,514
--------- -----------
No customer individually represents 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:
2021 2020
GBP'000 GBP'000
United Kingdom 41,174 40,482
Rest of Europe 1,009 747
North America 15,522 17,940
Asia Pacific 21,103 106
78,808 59,275
--------- -----------
Revenues are disaggregated as follows:
2021 2020
GBP'000 GBP'000
Revenue by sector
Track testing 49,680 51,760
Laboratory testing and simulation 15,700 9,754
--------- -----------
65,380 61,514
--------- -----------
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 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 report relate to underlying
business performance (as defined above) unless otherwise
stated.
2021 2020
GBP'000 GBP'000
Amortisation of acquired intangibles 4,432 3,549
Acquisition related costs / (credit) 840 (1,865)
ERP development costs 1,358 654
Inventory impairment - 3,267
Restructuring - 969
--------- -----------
6,630 6,574
-------------------------------------- --------- -----------
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 / (credit)
The costs relate to the acquisition of the Vadotech Group as
well as staff retention payments to the employees of rFpro. The
cash to pay this was contributed by the previous owner of rFpro
prior to acquisition, but as the employees had to remain within the
business for a period prior to receiving payment, a charge had to
be recognised in the income statement in both the current and the
prior year. The credit in the prior year relates to the release of
deferred consideration on the rFpro acquisition which, due to
COVID-19 disruption, was not payable.
ERP development costs
During April 2021 the IFRS Interpretations Committee finalised
their agenda decision regarding configuration and customisation
costs in Cloud Computing Arrangements (Software as a Service,
'SaaS') under IAS 38. The agenda decision specifies that where ERP
systems are hosted on the cloud, no intangible asset arises and
configuration and customisation costs should be written off. The
ERP system currently being implemented is hosted on the cloud;
therefore the capitalised expenditure for development costs has now
been expensed.
Inventory impairment
In the prior year, following a detailed review of inventory
levels and usage, a number of items previously included in the
carrying value were written off and the system of accounting for
inventory updated to better reflect the Group's current
operations.
Restructuring
The restructuring costs in 2020 relate to rebalancing the skill
base of the business and termination of agents.
Tax
The tax impact of these adjustments was as follows: amortisation
GBP0.7m (2020: GBP0.5m) acquisition related GBP0.1m (2020:GBP0.1m),
ERP GBP0.3m (2020:GBP0.1m), inventory nil (2020: GBP0.6m) and
restructuring nil (2020: GBP0.3m).
4. Tax
The statutory effective rate of tax for the year is higher than
(2020: lower than) the standard rate of corporation tax in the UK
of 19% (2020: 19%).
The adjusted effective tax rate, adjusting both the tax charge
and the profit before tax is 18.2% (2020: 17.7%).
5. Dividend paid
2021 2020
GBP'000 GBP'000
Final 2019 dividend paid of GBP0.028
per share - 626
Final 2020 dividend paid of GBP0.044 994 -
per share
Interim dividend paid of GBP0.016 362 -
per share
1,356 626
-------------------------------------- --------- -----------
In respect of the year ended 31 August 2021, the Board has
proposed a final dividend of 3.24p per share totalling GBP733,000.
An interim dividend was paid of 1.6p per share totalling
GBP362,000. If approved, the final dividend will be paid on 28
January 2022 to shareholders on the register on 31 December
2021.
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:
2021 2020
GBP'000 GBP'000
Profit for the year attributable
to owners of the Group 2,985 4,022
Adjusted profit after tax 8,520 9,016
Weighted average number of shares
('000)
Basic 22,602 22,482
Diluted 22,782 22,622
Earnings per share
Basic 13.2 pence 17.9 pence
Diluted 13.1 pence 17.8 pence
Adjusted basic 37.7 pence 40.1 pence
Adjusted diluted 37.4 pence 39.9 pence
7. Share capital
The allotted, called up and fully paid share capital is made up
of 22,622,344 ordinary shares of GBP0.01 each.
Note Number Share Share premium
of shares capital GBP'000 Total
000 GBP'000 GBP'000
At 1 September
2019 22,220 222 60,049 60,271
27 September 2019 (i) 200 2 770 772
------- ----------- --------- -------------- ----------
11 December 2019 (ii) 32 - 142 142
------- ----------- --------- -------------- ----------
3 March 2020 (iii) 58 1 229 230
------- ----------- --------- -------------- ----------
3 March 2020 (iv) 6 - 27 27
------- ----------- --------- -------------- ----------
4 May 2020 (v) 33 - 410 410
------- ----------- --------- -------------- ----------
2 June 2020 (vi) 16 - 64 64
------- ----------- --------- -------------- ----------
19 August 2020 (vi) 11 1 45 46
------- ----------- --------- -------------- ----------
At 31 August 2020 22,576 226 61,736 61,962
----------- --------- -------------- ----------
8 October 2020 (vii) 8 - 29 29
------- ----------- --------- -------------- ----------
4 December 2020 (ix) 1 - 18 18
------- ----------- --------- -------------- ----------
15 March 2021 (x) 33 - 412 412
------- ----------- --------- -------------- ----------
17 May 2021 (xi) 4 - 15 15
------- ----------- --------- -------------- ----------
At 31 August 2021 22,622 226 62,210 62,436
=========== ========= ============== ==========
(i) On 27 September 2019, a total of 199,526 share options were
exercised of GBP0.01 each for GBP3.95.
(ii) On 11 December 2019, a total of 31,970 share options were
exercised of GBP0.01 each for GBP3.95.
(iii) On 3 March 2020, a total of 58,086 share options were
exercised of GBP0.01 each for GBP3.95.
(iv) On 3 March 2020, a total of 6,173 share options were
exercised of GBP0.01 each for GBP4.45.
(v) On 4 May 2020, a total of 33,333 share options were
exercised of GBP0.01 each for GBP12.30.
(vi) On 2 June 2020, a total of 16,162 share options were
exercised of GBP0.01 each for GBP3.95.
(vii) On 19 August 2020, a total of 11,321 share options were
exercised of GBP0.01 each for GBP3.95.
(viii) On 8 October 2020, a total of 7,631 share options were
exercised of GBP0.01 each for GBP3.95.
(ix) On 4 December 2020, a total of 692 shares were issued to
James Routh of GBP0.01 in satisfaction of 20% of his respective
annual bonus payments for the year ended 31 August 2020, and a
total of 349 shares were issued to Sarah Matthews-DeMers of GBP0.01
in satisfaction of 20% of her respective annual bonus payments for
the year ended 31 August 2020.
(x) On 15 March 2021, a total of 33,333 share options were
exercised of GBP0.01 each for GBP12.30.
(xi) On 17 March 2021, a total of 3,786 share options were
exercised of GBP0.01 each for GBP3.95.
8. Principal risks
The principal risks and uncertainties impacting the Group are
described on pages 56-58 of our Annual Report 2021. They include:
COVID-19, downturn or instability in major markets, 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, supply chain,
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.
9. Related party transactions
Mr A Best, former Chairman of the Company, is a trustee and
beneficiary of the Best Middleton Trust. Rental payments of
GBP44,000 (2020: GBP48,000) were made in the year to the Trust. In
July 2021 the lease was terminated and therefore all agreements
with a controlling shareholder have now ceased.
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END
FR PPGRAGUPGGMW
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November 24, 2021 01:59 ET (06:59 GMT)
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