AB Dynamics PLC Trading Update & Notice of Results (3622Z)

TIDMABDP

RNS Number : 3622Z

AB Dynamics PLC

18 September 2020

18 September 2020

AB Dynamics plc

("AB Dynamics" or "ABD" or the "Group")

Trading Update & Notice of Results

AB Dynamics plc (AIM: ABDP), the designer, manufacturer and supplier of advanced testing systems and simulation products to the global automotive and mobility sectors, provides a trading update in advance of the publication of its results for the year ended 31 August 2020.

Business performance

The business is performing well against the challenging global trading backdrop caused by COVID-19. Our manufacturing facilities have been fully operational with no significant supply chain issues, ensuring the Group has been able to deliver against customer requirements. While many of our employees continue to work from home, we are taking a cautious approach in returning to our offices, in line with guidance of local governments, with the safety of staff being our priority.

Reflecting the resilience of the business model and the Group's strong market positions, we expect to report revenue for the year ended 31 August 2020, in the range of GBP60m to GBP62m. This includes the effect of COVID-19 specific disruption to our international customers, which resulted in a reduction in activity levels in the second half with Group revenues for the period being down by approximately 20% against a very strong prior year comparator.

Track testing, which tends to have a shorter order cycle, was impacted by the suspension of customer testing operations during lockdown. As customer activity has restarted, we have seen order intake recover during the final quarter. The Board anticipates this recovery towards pre-COVID levels will continue into the new year, provided there are no further significant market disruptions.

As previously indicated, laboratory testing and simulation was impacted by deferment of anticipated orders as customers delayed capital procurement decisions and motorsport series were suspended. Good engagement with customers has been maintained through this challenging period and we remain confident of winning these deferred orders, albeit timing is likely to be dependent on further stabilisation of customer visibility.

Gross margins are anticipated to be ahead of the prior year, benefitting from the transition to a direct sales model in key territories as well as the positive mix contribution from service contract revenues. In response to the uncertainty presented by the pandemic, as well as the short-term impact on activity levels, mitigating actions were promptly implemented to control discretionary spending and conserve cash where appropriate. The Group has continued to invest in new product development as well as the business infrastructure which the Board believes is critical to delivering its long-term growth and strategic development objectives for the business.

Financial position

The Group has been able to maintain its very strong financial position through the second half, with cash at 31 August 2020 of GBP31.1m (2019: GBP36.2m), after investing in new product development and our capability and capacity, including GBP5.2m on the North Site construction project.

Progress against strategy

The Group's financial position, together with the resilience of the trading performance through H2, has enabled the Group to maintain momentum in its strategic development programme with investment to underpin long-term organic growth and returns generation.

We are pleased with the ongoing progress made against the five point strategy announced in April 2019. Investments in geographic diversification, direct routes to market and our service and support offering have been complemented by the commencement of important initiatives to improve our systems, processes and structure. This, together with continued investment in infrastructure, people and new product development will result in a resilient, sustainable business able to more effectively take advantage of the significant structural and regulatory changes in our end markets.

Moving into the new year, the Board continues to see significant scope to accelerate the Group's progress and deliver on its strategic priorities, including further product development as well as progressing its pipeline of potential acquisition opportunities.

Dividend

Given the greatly elevated uncertainty at the time of the interim results, the Board took the prudent decision to suspend the interim dividend. In line with the Group's broader capital allocation policy and reflecting its confidence in the outlook for the business, it is the Board's intention to reinstate payment of a dividend at the year end.

Change in presentation of share-based payment charge

The Group has previously reported the share-based payment charge as an adjustment to operating profit, however for the year ended 31 August 2020 onwards, the charge will be included within adjusted reporting measures. The expected impact in 2020 is GBP1.3m.

Notice of results

The Group will announce its results for the year ended 31 August 2020 on Wednesday 25 November 2020. 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 Tulchan Communications at [e-mail] or 0207 353 4200.

Dr James Routh, CEO commented, "Despite the ongoing impact of the COVID-19 pandemic, the Group has demonstrated the resilience of its business model and the commitment of its employees. We continue to make good progress against our stated strategic priorities and the long-term regulatory and structural growth drivers remain intact. We are pleased with the progress of the businesses acquired during 2019 against a backdrop of challenging market conditions and we have introduced new products and services that will facilitate future growth."

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 Felicity Jackson, Company Secretary.

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE EU MARKET ABUSE REGULATION (596/2014). UPON THE PUBLICATION OF THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

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, UK. 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.

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September 18, 2020 02:00 ET (06:00 GMT)