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 2020.
Adjusted operating profit1
Adjusted operating margin
Adjusted profit before tax1
Statutory operating profit
Statutory profit before tax
Statutory profit after tax
Cash flow from operations
Adjusted diluted earnings per share1
Statutory basic earnings per share
Statutory diluted earnings per share
Total dividend per share
1Before amortisation of acquired intangibles, inventory impairment, acquisition related charges and restructuring costs. A reconciliation to statutory measures is given below. Prior year comparatives have been restated to reflect the inclusion of share based payments which were previously reported as an adjustment.
· Strong first half performance, offset by challenging trading conditions in the second half due to the COVID-19 pandemic
· Track testing revenue increased by 4% reflecting a combination of strong growth in ADAS platforms and testing, offset by a reduction in sales of driving robots and a suspension of testing operations as a result of the pandemic
· Laboratory testing and simulation revenues increased by 18% as a result of significant growth in SPMM and simulation revenues, despite experiencing deferments of orders in the second half
· Reduction in adjusted operating margins to 18.4% driven by continued strategic investment in capability to support long term growth drivers
· Significant cash balance of £31.2m (2019: £36.2m) after investing £8.2m in capital expenditure in the period, which continues to provide resources to support the Group's investment requirements
· Reinstatement of dividends, with a proposed final dividend of 4.4p per share, equal to the total dividend for 2019 and reflecting the Board's confidence in the Group's financial position and prospects
Operational and strategic highlights
· Strong geographic growth in the USA and Japan following the successful establishment of new sales and support offices
· Successful launch of new products including Halo driving robot, aNVH, Guided Soft Target 120 and Radar Cart
· Further development of the simulation sector with new products including Static Simulator, Data Farming, Linux OS version and highly accurate digital twins
· Growth in recurring revenue to 28%, up from 10% of Group revenue through acquired businesses and increased sales of service and support contracts
· Continued investment in management capability, processes and systems, including progress towards implementation of a Group-wide ERP system
· Construction of the new Engineering Design Centre nearing completion
· Solid performance from companies acquired during 2019, including significant growth of track testing services in the USA
Current trading and outlook
· Q1 trading to date in line with Q4 FY20 exit rate
· Progress in laboratory testing and simulation, with a number of the deferred 2020 orders secured either side of the financial year end
· Second wave impacts of the pandemic make order intake patterns difficult to predict into 2021, particularly for laboratory testing and simulation
· Long-term, sustainable structural and regulatory growth drivers remain intact
· Continued innovation and capability investment generating positive commercial momentum
· Well placed and sufficiently invested to capitalise on opportunities when levels of demand return
· The Group has resumed its acquisition strategy and is actively exploring a number of opportunities
There will be a presentation for analysts this morning at 9.30am via conference call. Please contact [email protected] if you would like to attend.
Commenting on the results, Dr James Routh, Chief Executive Officer said:
"The Group has delivered a robust and resilient performance in 2020 against a backdrop of challenging market conditions due to COVID-19. After a very strong first half of the financial year, the Group took rapid and effective actions to mitigate the risks of the pandemic. Whilst the backdrop has been uncertain, the Group's strong financial position has enabled us to remain focussed on maintaining our strategic momentum. The Group continued to invest in its capabilities, systems and business infrastructure which, despite a softening in operating margins over the near term, ensures the Group remains well placed to capitalise on the long-term regulatory and structural growth drivers, which remain intact.
"Demand in the first quarter of the current year has been consistent with the Q4 FY20 exit rate. The disruption associated with further waves of infection means that visibility is limited and there remains short-term uncertainty as to the shape and rate of this recovery. Looking further ahead, we remain confident that demand will recover to pre-crisis growth patterns over the medium term.
"Despite the uncertain backdrop, we see significant scope to deliver on the Group's strategic priorities, such as further product development and executing on our pipeline of potential acquisition opportunities. We are very encouraged by the initial progress already evident from our key strategic investment initiatives. The market drivers are compelling, the medium-term outlook for AB Dynamics remains positive and the Board is confident the Group can continue to deliver on its strategic priorities"