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    ABDP   GB00B9GQVG73


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AB Dynamics : 2021 Interim Results

04/28/2021 | 02:25am EDT

28 April 2021

AB Dynamics plc

Unaudited interim Results for the six months ended 28 February 2021

"Stable performance with positive trading momentum"

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").

H1 2021

H2 2020

H1 2020








Gross margin




Adjusted operating profit1




Adjusted operating margin1




Statutory operating profit




Cash flow from operations




Net cash







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.

  • 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.

Financial performance

  • 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 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 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."


AB Dynamics plc

01225 860 200

Dr James Routh, Chief Executive Officer

Sarah Matthews-DeMers, Chief Financial Officer

Peel Hunt LLP

0207 894 7000

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 Felicity Jackson, Company Secretary.

Half Year Review

Group overview

Against a backdrop of macroeconomic conditions that remain challenging, the Group has delivered another resilient performance, whilst also continuing to invest to ensure AB Dynamics can capitalise on the significant long-term structural and regulatory growth drivers within its markets.

The Group has seen gradual recovery in order intake through the first half of the year, with customer activity returning slowly, as testing operations are still impacted by COVID-19 restrictions, and likely to remain so in the short term. Pleasingly, several capital equipment orders which were deferred in the prior year have now been received, including an order for an advanced variant of our simulator for a major automotive OEM.

Our continued investments have strengthened our market position to enable the business to emerge strongly as markets recover. New product development has continued as planned with new launches including high speed ADAS (Advanced Driver Assistance Systems) platforms and the next generation simulator. The completion of the new Engineering Design Centre and continued build of the senior management team strengthen our capability and capacity.

Financial performance

Against a very strong prior year comparative period (delivered prior to the COVID-19 pandemic) in which revenues increased by 34%, the results for the first half of FY21 are significantly lower. Revenue of £27.3m was down 21% (H1 2020: £34.7m).

However, as the COVID-19 pandemic did not impact the first half of last year, a more relevant comparative is against the second half of the last financial year. Against H2 2020, current period revenue was up 2% (H2 2020: £26.8m).

Gross margins reduced by 80 bps to 57.7% (H1 2020: 58.5%, H2 2020 58.3%), 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.

Group adjusted operating profit of £3.5m decreased 57% against H1 2020, but increased 6% against H2 2020. The adjusted operating margin decreased against H1 2020 to 12.8% (H1 2020: 23.2%), being significantly impacted by the decrease in sales volumes, by our continued investment in our strategy for growth and building out the senior management team, partly offset by mitigating actions to reduce discretionary spending. It was up 60 bps against the second half of last year (H2 2020: 12.2%) with similar levels of activity.

Net finance costs were £nil (H1 2020: net income £0.1m).

Adjusted profit before tax was £3.5m (H1 2020: £8.1m). The Group adjusted tax charge totalled £0.5m (H1

2020: £1.5m), an adjusted effective tax rate of 15% (H1 2020: 19%).

Adjusted diluted earnings per share was 13.1p (H1 2020: 29.2p), a decrease of 55%, reflecting the decrease in operating profit.

Statutory operating profit reduced by 62% to £1.4m and after net finance costs of £nil (H1 2020: net finance income £0.1m), statutory profit before tax was down 63% from £3.7m to £1.4m, giving statutory basic diluted earnings per share of 5.6p (H1 2020: 12.9p). The statutory tax charge was £0.1m (H1 2020: £0.7m). A reconciliation of statutory to underlying non-GAAP financial measures is provided below. The adjustments of £2.1m comprise £1.7m of amortisation of acquired intangibles and £0.4m of acquisition costs (H1 2020: £4.4m comprising £1.8m of amortisation of acquired intangibles, £0.6m acquisition costs, £0.1m restructuring costs and £1.9m inventory impairment).

The Group delivered strong operating cash flow of £7.8m with the net cash position at the period end of £33.1m underpinning a robust balance sheet and providing the resources to acquire the Vadotech Group after the period end for €20.0m initial consideration and first performance payment from existing cash balances.


The emergence of the COVID-19 pandemic in early 2020 saw unprecedented impacts on global economies, with the automotive sector impacted particularly significantly. The Group took rapid steps to limit discretionary spend and conserve cash whilst we gained clarity on the overall short-term impact on the business.

The Group has not seen any significant adverse impacts on its supply chain or manufacturing facilities, but many larger, capital equipment orders were initially deferred by our customers. More significant however was the widespread curtailment of and significant disruption to both motor sport and the vehicle track testing activities of our customers during the second half of the previous financial year. This directly and severely impacted demand for our testing services and products. Whilst activity in these areas remains below pre-COVID 19 levels in many instances, we are seeing evidence of a gradual and sustained recovery. Order intake has started to improve during the last three quarters and several of the anticipated larger capital equipment orders have now been received, giving improved order coverage for the second half of the year.

Throughout the periods of lockdown, the Group has been able to maintain key manufacturing and track testing operations, whilst approximately 70% of our global workforce worked remotely. This balance has proved to be effective, and we have been able to continue delivering for our customers whilst maintaining our investment activities, particularly in product development. The restrictions on travel are curtailing certain installation, commissioning and training activities from taking place, however our recently added international sales and support offices have been able to continue to support customers where required.

Looking forward there remains uncertainty around the ongoing impact of COVID-19 and the Board continues to be cautious and alert to conditions in the wider automotive market. Timing of order intake is likely to remain variable and we expect this uncertainty to continue through at least the remainder of the financial year, particularly in relation to larger, capital equipment orders.

However, we are confident that the long-term structural and regulatory drivers that underpin our markets remain firmly intact. The Group is therefore continuing to invest, demonstrated by the recent acquisition of Vadotech Group, as well as further investment in new product development and business infrastructure, all of which the Board believes are critical to delivering its long-term growth and strategic development objectives.

Sector review

Track testing

Track testing revenue of £20.9m was down 29% against H1 2020 (£29.5m) and down 6% against H2 2020 (£22.2m).

Driving robot sales started to recover in the first half of the year to £9.1m (H1 2020: £13.7m, H2 2020 £7.3m), having fallen significantly in the second half of last year. Compared with pre-pandemic levels, the Group expects sales revenues in this sector to remain constrained in the short term, before growing again once new regulatory requirements for new ADAS technologies are released and customer track testing operations can resume at full capacity.

Demand for ADAS platforms was resilient during the second half of last year but reduced to £9.6m in H1 2021 (H1 2020: £12.7m, H2 2020: £11.4m). Demand for these products, particularly the Launchpad, is expected to continue to build as new test protocols are released from regulatory and consumer bodies such as Euro-NCAP. 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. We have recently launched higher speed versions of the GST and Launchpad, which can operate at speeds of up to 120kph and 60kph respectively, enabling customers to perform a greater range of tests, particularly the assessment of automated lane keeping technology.

The track testing services provided to the US market by DRI enable customers to evaluate the performance of ADAS systems, autonomous vehicles and vehicle dynamics through its extensive test facility. DRI's track testing revenue of £2.2m fell by £0.9m in the first half of the year, which is usually their quieter period, as government related contracts were delayed due to the change of administration and customers' ability to attend the track was curtailed (H1 2020: £3.1m, H2 2020: £3.5m).

Order intake for track testing products has continued to improve, giving confidence for the continued recovery into the second half of the year.

The Group continues to invest in new product development in this sector with further new product launches planned for H2.

Laboratory testing and simulation

The laboratory testing and simulation sector delivered strong revenue growth against both comparator periods; at £6.3m it increased 23% on H1 2020 and 38% on H2 2020 (H1 2020: £5.2m, H2 2020: £4.6m).

Simulation sales grew significantly, with the receipt of one of the deferred simulator orders early in the first half and growth from the return of motorsport series. Simulation revenue of £4.3m grew 39% compared with £3.1m in H1 2020 (H2 2020: £1.6m).

Following the receipt of another deferred order, SPMM revenue of £2.0m was broadly similar to H1 2020 (H1 2020: £2.1m, H2 2020: £3.0m) with further opportunities in the pipeline.

The Group has made solid progress during the period in laboratory testing and simulation, with a number of orders received for large systems and further opportunities in the pipeline, although timing still remains uncertain. The current order coverage for SPMM and simulators provides good confidence for delivery of expectations for the remainder of the financial year.

The Group's new Engineering Design Centre now houses a simulation research and development facility to accelerate the development of new simulator technologies, including the next generation full motion simulator.

This is an excerpt of the original content. To continue reading it, access the original document here.


AB Dynamics plc published this content on 28 April 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 April 2021 06:24:02 UTC.

ę Publicnow 2021
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Technical analysis trends AB DYNAMICS PLC
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Mean consensus BUY
Number of Analysts 7
Last Close Price 1 800,00 GBX
Average target price 2 403,14 GBX
Spread / Average Target 33,5%
EPS Revisions
Managers and Directors
James Mathew Routh Chief Executive Officer & Director
Sarah Matthews-DeMers Chief Financial Officer & Director
Richard Peter Elsy Non-Executive Chairman
Richard Hickinbotham Independent Non-Executive Director
Louise Margaret Evans Independent Non-Executive Director
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