26 September 2024
AB
Dynamics plc
Pre-close
Trading Update
Acquisition of Bolab Systems GmbH
AB Dynamics plc ("AB Dynamics", the
"Company" or the "Group"), the designer, manufacturer and supplier
of advanced testing, simulation and measurement products to the
global transport market, issues the following trading update in
advance of the publication of its results for the year ended 31
August 2024 ("FY 2024").
Trading update
The Group performed strongly during
the second half of the year, delivering significant organic growth.
The Board expects full year revenue to exceed £110m and
with robust margin performance through the second
half, full year adjusted operating profit is anticipated to be
ahead of current market expectations1.
Testing Products has continued to
experience strong demand, with good growth in driving robots and
ADAS platforms.
The Testing Services business has
returned to growth following the removal of external impediments
that adversely impacted the prior year. In the Group's US
operation, we saw improved access to vehicles for testing and in
the Chinese based operation there was a relaxation of pandemic
restrictions.
Revenue in the Simulation business
also showed a modest increase, with a number of simulator system
deliveries in the second half of the year.
Order intake continues to be strong,
providing good momentum and visibility as the business enters FY
2025.
Financial position
The Group maintained its track
record of strong operating cash conversion, with net cash at 31
August 2024 of £28.6m (2023: £32.0m).
Acquisition of Bolab Systems GmbH
The Group also announces that it
completed the acquisition of Bolab Systems GmbH ("Bolab") on 25
September 2024 for an initial consideration of €5.0m (£4.2m) (the
"Acquisition").
Bolab is a niche automotive power
electronics testing products business. Founded in 2012 and based
near Stuttgart, Germany, it supplies low-voltage and high-voltage
equipment for testing automotive sub-systems and components for
conventional, hybrid and electric vehicles.
The acquisition supports the
expansion of the Group's capabilities in the Testing Products
business and provides further alignment with the structural growth
drivers in the sector.
Financial considerations of the Acquisition
The maximum consideration payable
for Bolab is €11.0m (£9.3m), comprising an initial cash
consideration of €5.0m (£4.2m) and contingent consideration of up
to €6.0m (£5.1m). 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. Contingent
consideration of up to €6.0m (£5.1m) will be payable in cash across
two tranches for the two years following completion, subject to
meeting certain performance criteria for each year.
Bolab has a good track record of
profitable growth. Based on unaudited accounts, in the year ended
31 December 2023, Bolab generated revenue of €3.4m (2022: €2.5m)
and operating profit of €0.6m (2022: €0.4m). Net assets at 31
December 2023 were €1.1m.
The Board expects that the
Acquisition will be earnings enhancing in FY 2025 with annualised
revenue forecast to be approximately €4.0m (£3.2m) and forecast
adjusted operating profit of approximately €0.8m
(£0.7m).
Bolab is being acquired from its
founder, who will remain in the business.
1 Company compiled analyst expectations for the year ended
31 August 2024 is for adjusted operating profit in the range of
£17.3m to £18.8m.
Enquiries:
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AB
Dynamics plc
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01225 860 200
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Dr James Routh, Chief Executive
Officer
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Sarah Matthews-DeMers, Chief
Financial Officer
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Peel Hunt LLP (Nominated Adviser and Joint
Broker)
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0207 418 8900
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Mike Bell
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Ed Allsopp
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Stifel Nicolaus Europe Limited (Joint
Broker)
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0207 710 7600
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Matthew Blawat
Harry Billen
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Teneo
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0207 353 4200
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James Macey White
Matt Low
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The person responsible for arranging
the release of this information is David Forbes, Company
Secretary.