3 April 2024
AB
Dynamics plc
("AB
Dynamics", the "Company" or the "Group")
Acquisition of Venshure Test Services LLC and Notice of
Interim Results
AB Dynamics (AIM: ABDP), the
designer, manufacturer and supplier of advanced testing, simulation
and measurement products and services to the global transport
market, is pleased to announce the acquisition of Venshure Test
Services LLC (the "Acquisition" or "VTS"), and to provide notice of
the Group's Interim Results announcement.
Acquisition of VTS
VTS is a leading provider of
dynamometer-based testing services to the automotive sector in the
USA, particularly focussed on the development and deployment of
electric vehicles (EV) for US based automotive OEMs.
Headquartered in Chelsea, Michigan,
VTS offers a full range of testing services including mileage
accumulation and assessment of EV powertrain and battery
performance across a range of extreme climatic
conditions.
The business comprises a
23,300ft2 testing facility strategically located close
to the Detroit area and includes dynamometers and EV vehicle
testing laboratories. The vehicle testing laboratories provide
standardised procedures to validate EV battery energy consumption
and range testing, producing SAE J1634 quality data.
The Acquisition supports several of
the Group's strategic priorities including:
· Further alignment of the Group's Testing Services operations
to the structural growth drivers in the automotive
sector;
· Expanding the Group's capabilities and broadening the scope of
services in the Testing Services area;
· Complementing the Group's existing California-based track
testing services business with laboratory-based testing;
and
· Opportunity to replicate testing services capabilities across
both locations.
Financial considerations of the
Acquisition
The maximum consideration payable
for VTS is $30.0m (£23.6m), comprising an initial cash
consideration of $15.0m (£11.8m). The Acquisition has been
completed on a cash-free, debt-free basis with the initial cash
consideration funded from the Group's existing cash resources and
short-term utilisation of part of the Group's revolving credit
facility. Contingent consideration of up to $15.0m will be payable
in cash across two tranches for the 2 years following completion,
subject to meeting certain performance criteria for both
years.
VTS has a good track record of
profitable, cash-generative growth. Based on unaudited accounts, in
the year ended 31 December 2023, VTS generated revenue of $3.5m
(2022: $2.4m), earnings before interest, tax, depreciation and
amortisation ('EBITDA') of $1.9m (2022: $1.2m) and adjusted
operating profit of $1.5m (2022: $0.8m). Unaudited net assets
at 31 March 2024 were approximately $5m.
The Board expects that the
Acquisition will be earnings enhancing in FY24, with revenues for
the 5-month period forecast to be approximately $1.8m (£1.4m) and
adjusted operating profit of approximately $0.7m
(£0.5m).
VTS is being acquired from its
two shareholders, Mr Gerard Glinsky and Mr David Ploucha, both of
whom will remain in the business to ensure ongoing delivery of the
growth expectations.
More information on VTS can be found
on its website at www.venshuretest.com
Notice of interim results
The Group expects to announce its
interim results for the six months ended 29 February 2024 on 23
April 2024. The management team will be hosting a presentation for
analysts on the day of the results. Analysts who wish to attend the
presentation should register their interest with Teneo at
abdynamics@teneo.com or 0207 353 4200.
A presentation will also be provided
on the Investor Meet Company platform on 24 April 2024 at
9am. Anyone wishing to attend should register their interest
via
https://www.investormeetcompany.com/ab-dynamics-plc/register-investor.
Dr James Routh, Chief Executive
Officer, said:
"I am very pleased to announce the
acquisition of VTS and the expansion of the Group's testing
services provision in the USA. The acquisition expands both our
capability and geographic coverage in the important and growing
field of EV battery and powertrain performance
evaluation.
"Customer focus on electric vehicle
and battery technology is a long-term trend that will support
continued growth at AB Dynamics as competition increases and new
vehicle models require additional development work, testing and
validation.
"VTS has a first-class reputation
for providing vehicle testing services to its OEM customer base and
we look forward to leveraging the sales capabilities of AB Dynamics
to drive cross-selling and expand this further.
"We expect the acquisition to
provide us with an excellent platform for further growth and we are
delighted to welcome the VTS team to AB Dynamics."
Enquiries:
AB Dynamics plc
01225 860 200
Dr James Routh, Chief Executive
Officer
Sarah Matthews-DeMers, Chief
Financial Officer
Peel Hunt LLP (Nominated
Adviser and Joint Broker ) 0207 894 7000
Mike Bell
Ed Allsopp
Stifel Nicolaus Europe Limited
(Joint Broker)
0207 170 7600
Matthew Blawat
Harry Billen
Teneo
0207 353 4200
James Macey White
Matt Low
Arthur Rogers
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, Group Legal
Counsel.