AB Dynamics plc (AIM: ABDP, "ABD", "the Group"), the designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive market, is pleased to announce its interim results for the six-month period to 28 February 2021 (the "period").
Adjusted operating profit1
Adjusted operating margin1
Statutory operating profit
Cash flow from operations
Adjusted diluted earnings per share1
Statutory diluted earnings per share
Interim dividend per share
Final dividend per share
1Before amortisation on acquired intangibles, acquisition related charges, and exceptional items. A reconciliation to statutory measures is given in the Financial Review. Comparatives for H1 2020 have been restated to reflect the inclusion of share-based payments which were previously reported as an adjustment.
2 The prior year comparative has been restated to reflect a change in the statutory tax charge following the finalisation of provisional fair value adjustments on the acquisition of Dynamic Research Inc ('DRI') included in the Annual Report for the year ended 31 August 2020.
· Improved order intake against H2 2020 across both divisions with a positive book to bill ratio providing confidence in delivery of H2 revenue expectations, a significant proportion of which is covered by the current order book
· As anticipated, revenue was broadly comparable to H2 2020 with COVID-19 impact continuing into H1 2021
· Track testing revenue was 29% lower than H1 2020 and 6% lower than H2 2020, due to ongoing COVID-19 disruption to customer testing activity, although driving robot sales started to recover during the period
· Laboratory testing and simulation delivered revenue growth of 23% on H1 2020 and 38% on H2 2020 driven by strong order intake following the deferments last year
· Operating margins of 12.8% were consistent with H2 2020, reflecting reduced levels of activity and continued strategic investment in capability to support long-term growth drivers (H1 2020: 23.2%, H2 2020: 12.2%)
· Strong cash flow from operations of £7.8m. Significant net cash balance of £33.1m at the period end (29 February 2020: £34.2m, 31 August 2020: £30.0m) after investing £4.6m in capital expenditure in the period, providing scope to support the Group's strategic growth objectives. During H2 2021, €20m of this cash was used to fund the acquisition of Vadotech Group
· Interim dividend of 1.6p per share (H1 2020: nil)
Operational and strategic performance
· Customer activity slowly returning as testing operations remain restricted with COVID-19 impact continuing into H1 2021
· Continued progress in growing the proportion of recurring and service-based sales, which will be further enhanced by the strengthening of our APAC regional footprint
· New product development continues as planned with successful launches including high speed ADAS platforms and a next generation simulator
· Continued investment for growth with the completion of the new Engineering Design Centre and the ongoing build of the senior management team
· Since the period end, Vadotech Group has been acquired, demonstrating further progress against the Group's strategic priorities. The acquisition expanded our capability into on-road testing services and established a regional hub in the strategically important APAC region
Current trading and outlook
· As anticipated, performance in the first half of the year was broadly comparable to the second half of FY20, with continued impacts of the COVID-19 pandemic
· The order intake trend provides confidence for continued positive momentum into H2
· The Board's expectations for the financial year are unchanged
· Future growth prospects remain supported by long term structural and regulatory growth drivers in active safety and autonomous systems
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 another resilient performance in the first half of the year against a backdrop of market conditions that continue to be challenging.
We have seen an encouraging rebuild of demand in our key markets from the severe disruption experienced in the second half of FY20. The Board's expectations for the financial year are unchanged, despite the continued disruption associated with further waves of infection which means that visibility remains limited and there remains short-term uncertainty as to the shape and rate of the recovery. This, together with the risk of currency headwinds and Brexit-related logistics disruption, means that we remain cautious in the near term. However, our improved order intake provides positive trading momentum into H2. Looking further ahead, we remain confident that demand will recover over the longer term and that the actions we have taken in the last 12 months position the Group very strongly to capitalise on this.
Despite the uncertain backdrop, we see significant scope for continued progress against the Group's strategy, as demonstrated by the acquisition of the Vadotech Group in March 2021 and the related growth opportunities. The market drivers are compelling and the medium-term outlook for AB Dynamics continues to be positive. The Board remains confident the Group can continue to deliver on its strategic priorities."