Pre-Close Trading Update & Acquisition of Ansible
21 September 2022
AB Dynamics plc
("AB Dynamics", the "Company" or the "Group")
Pre-Close Trading Update
Acquisition of Ansible Motion Limited
AB Dynamics (AIM: ABDP), the designer, manufacturer and supplier of advanced testing, simulation and measurement products to the global transport market, is pleased to issue the following trading update and the announcement of an acquisition in advance of the publication of its preliminary results for the year ended 31 August 2022 ("FY22").
Trading Update
The Group performed strongly during the second half of the year, managing continued supply chain disruption effectively to deliver strong organic growth and another record half year period for sales. As a result, the Board expects to report revenue for FY22 of approximately £80m, representing year on year growth of approximately 22%. With robust margin performance through the second half, full year adjusted operating profit is also anticipated to be ahead of current market expectations.
The track testing sector delivered particularly strong growth throughout FY22, with good growth across all primary product lines. The laboratory testing and simulation sector showed more modest sales growth, predominantly due to timing on larger contracts.
The Group maintained its track record of strong operating cash conversion, with net cash at 31 August 2022 of £29.0m (2021: £22.3m), after capex investment of £4m.
Despite the significant sales growth throughout the year, order intake continued to be strong and resulted in another period of positive book to bill ratio. Whilst mindful of continued uncertainty in the wider economic backdrop, this provides good momentum as the business enters FY23.
Acquisition of Ansible Motion Limited
The Group has completed the acquisition of Ansible Motion Limited ("Ansible Motion") for an initial consideration of £19.2m (the "Acquisition").
Ansible Motion is a leading provider of advanced simulators to the global automotive market. Ansible Motion's products are used for a wide range of applications including evaluation of Advanced Driver Assistance Systems ("ADAS"), autonomy, vehicle dynamics, powertrain development and motorsport.
Founded in 2009 and headquartered in Norfolk, Ansible Motion has been a long-standing partner of rFpro, which was acquired by AB Dynamics in 2019. The Ansible Motion product range complements the existing AB Dynamics range of driving simulation products, building out the family of products to enable access to a wider range of customers and applications.
The Acquisition supports a number of the Group's stated strategic priorities including:
· Expanding the Group's product range in the simulation market and achieving critical mass in the simulation business unit;
· Enhancing the Group's capabilities in the field of simulation R&D through a talented team of engineers and increasing the capacity of the business through an additional product development and manufacturing facility in the UK; and
· Synergistic benefits of shared services and access to the existing AB Dynamics channels to market
Financial Considerations
The maximum consideration payable for Ansible is £31.2m, comprising an initial cash consideration of £16.0m and £3.2m of new ordinary shares in AB Dynamics issued to the vendors. 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. Conditional consideration of up to £12.0m will be payable in cash subject to meeting certain performance criteria for the year ending 31 August 2023.
Ansible Motion has a strong record of profitable, and cash generative growth. Based on unaudited accounts, in the year ended 31 March 2022 Ansible Motion generated revenue of £8.0m (2021: £5.4m), earnings before interest, tax, depreciation and amortisation ('EBITDA') of £1.9m (2021: £0.8m) and operating profit of £1.8m (2021: £0.7m). Net assets at 31 March 2022 were £4.1m.
The Board expects that the Acquisition will be earnings enhancing in FY23 with revenues forecast to be approximately £12.0m, based on the existing orderbook and strong order pipeline, and adjusted operating profit of approximately £2.2m. Should this forecast be achieved, the conditional cash payment would be estimated at £1.3m.
Ansible Motion is being acquired from its three shareholders, Mr Kia Cammaerts, Mr Jonathan Walker and Mr Robert Stevens, with Mr Cammaerts and Mr Stevens remaining in the business as Managing Director and Chief Engineer respectively.
Dr James Routh, Chief Executive Officer, said:
"I am very pleased to be able to provide a positive trading update ahead of the publication of our full year results. The business has performed strongly against a backdrop of continued challenging market conditions and demonstrates the resilience of our business model.
The acquisition of Ansible Motion is another important milestone in our ongoing strategic development and supports the Group's strategic initiatives by broadening the scope of the Group's product offering, strengthens our position in the strategically important global simulation market, and enhances our capabilities in R&D and manufacturing.
Ansible Motion is a business we have known for a long time, and has an outstanding reputation for providing customer focussed driving simulation solutions and, coupled with our existing simulator business and our world class simulation software rFpro, this acquisition positions us as a market leader with genuine scale to drive significant continued growth in the simulation sector.
The existing order book and strong market presence of Ansible Motion, along with our established international sales channels provides us with an outstanding platform for growth and we are very pleased to welcome Kia, Robert and each of Ansible's 38 employees to AB Dynamics."
More information on Ansible Motion can be found on its website at www.ansiblemotion.com
Notice of results
The Group will announce its results for the year ended 31 August 2022 on Wednesday 23 November 2022. 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 abdynamics@tulchangroup.com or 0207 353 4200.
Issue of Equity and Total Voting Rights
Pursuant to the acquisition of Ansible Motion, application has been made to London Stock Exchange for 258,795 consideration shares to be admitted to trading on AIM and it is expected that Admission will become effective, and that trading will commence at 08.00 a.m. on 26 September 2022 ("Admission").
Following Admission, and in accordance with the Financial Conduct Authority's Disclosure Guidance and Transparency Rules ("DTRs"), the Company's total issued share capital will consist of 22,885,261 ordinary shares of 1 penny each ("Ordinary Shares") with one voting right per Ordinary Share. The Company does not hold any Ordinary Shares in Treasury. Shareholders may therefore use this figure as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company, under the DTRs.
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 David Forbes, Company Secretary.
Enquiries :
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
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