Interim Results for the 6 months ended 28 Feb 2015

RNS Number : 4490L

AB Dynamics PLC

28 April 2015

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

Interim Results for the 6 months ended 28 February 2015

AB Dynamics plc (AIM:ABDP), a designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry, is pleased to announce its Interim Results for the six month period to 28 February 2015.

Financial Highlights

· Revenues increased 13% to £7.56 million (H1 2014: £6.69 million)

· Profit Before Tax increased 30% to £1.51 million (H1 2014: £1.16 million)

· Net Cash at 28 February 2015 of £7.03 million (H1 2014: £4.55 million)

· Interim dividend increased 10% to 1.1p per ordinary share (H1 2014: 1.0p)

Operational Highlights

· Company receives first Brazilian order for SPMM

· New interim manufacturing facility on-line and generating efficiencies

· AB Dynamics Japan now established to serve all Company product lines in the region

· Track testing demand rising with Advanced Driver Assistance Systems (ADAS) targets

· Awarded conditional grant of up to £2.3 million from UK government Regional Growth Fund

Tim Rogers, Managing Director of AB Dynamics, commented:

"For the past six months the Company has delivered significant revenue and profit growth, combined with operational efficiencies leading to improved gross margins and cash generation. The Group continues to go from strength to strength: the progress of the new factory remains on track with completion expected in the latter part of 2016; and the Company continues to successfully attract key personnel having passed the 60 employees landmark. With a strong order book in place and continuing product development, the Board is pleased to announce an increased interim dividend of 1.1p per share."

For further information please contact:

AB Dynamics plc Tim Rogers, Managing Director Tony Best, Chairman	01225 860 200
Cairn Financial Advisers LLP (Nomad) Tony Rawlinson Avi Robinson	0207 148 7900
Charles Stanley Securities Limited (Broker) Dugald J. Carlean Karri Vuori	0207 149 6000
Newgate (PR) Adam Lloyd Tim Thompson Andre Hamlyn Helena Bogle	0207 653 9850

Overview of AB Dynamics plc

ABD is a leading designer, manufacturer and provider of advanced testing and measurement products for vehicle suspension, brakes and steering to the global automotive research and development sector. The Group was founded in 1982 and listed on AIM in May 2013. The Group is headquartered in Bradford on Avon employing over 60 staff. ABD currently supplies all of the top twenty automotive manufacturers, including Honda, Toyota, Ford and Volkswagen, who routinely use the Group's products to test vehicle safety.

Managing Director's and Chairman's Statement

We are pleased to report on a successful first half of the financial year for AB Dynamics. The continued strong performance resulted in profit before tax for the half year to 28 February 2015 of £1.51 million (2014: £1.16 million), an increase of 30%, and revenues of £7.56 million (2014: £6.69 million); an increase of 13%. Cash at the period end was £7.03 million (2014: £4.55 million).

Over the last six months, the considerable efforts of the Group have resulted in an improved gross margin driven in part, by manufacturing efficiencies derived from our new robot assembly facility - which came on line last year - and in part, by the improved margins obtained from our recently introduced new Track Testing products. The business has benefited from the recent establishment of AB Dynamics MF Japan Ltd, allowing the Group to support all of its products in the region via one single entity.

We see the global automotive industry investing more money in R&D with both regulatory factors and global competition driving the industry to develop new cars in a timely and efficient way.
Our Lab Testing and Track Testing products enable car companies to develop and design vehicles that are safe and pleasing to drive by factoring in precise dynamic measurements derived on their products from our machines.

The European and Japanese car makers continue to invest heavily in the field of Advanced Driver Assistance Systems (ADAS), where our package of Driverless Robots synchronising with our latest Soft Targets, assist the automotive industry in meeting the latest vehicle passenger and pedestrian safety standards, such as Euro NCAP.

We remain committed to building and establishing our new high-tech manufacturing and office facility. Now that many of the planning obstacles have been overcome we are optimistic that we will complete the build in the latter part of 2016.

The Company is pleased to have applied for and to have received in this period a conditional offer for UK Government Regional Growth Fund money of up to £2.3 million. What the Company will actually receive will be dependent on a protracted due diligence phase and meeting qualifying criteria, however it is expected that the funds will be applied to building our new facility and enabling us to embark on a more aggressive product development program.

The Group continues to attract and retain some of the very best talent in UK engineering, with several of our colleagues having been with the Company for more than 20 years. As in previous years we would both like to thank all of the team for their continued hard work and dedication.

Current trading is in line with management expectations and we remain confident of meeting our financial targets this financial year.

Our strong balance sheet and cash generation provides a good basis for an increase in the dividend and as indicated in our Trading Update on 20 March 2015, we are pleased to announce that the Directors are declaring an interim dividend of 1.1p per ordinary share. The ex-dividend date will be 7th May, the record date 8th May and the payment date 22^nd May 2015.

Anthony Best

Chairman

28 April 2015

Tim Rogers

Managing Director

28 April 2015

AB Dynamics plc

Unaudited consolidated statement of comprehensive income

for the six months ended 28 February 2015

Unaudited Unaudited Audited

6 months 6 months Year

ended ended ended

28 February 28 February 31 August 2015 2014 2014

£ £ £

Notes

Revenue 7,559,015 6,694,460 13,846,562

Cost of sales (5,275,393) (4,895,035) (9,816,570)

Gross profit 2,283,622 1,799,425 4,029,992

Administrative expenses (757,955) (651,413) (1,378,718)

Operating profit 1,525,667 1,148,012 2,651,274

Net finance income and (costs) (19,275) 16,362 25,692

Profit before taxation 1,506,392 1,164,374 2,676,966

Income tax expense (241,686) (292,852) (525,055)

Profit after taxation and total

comprehensive income for the period 1,264,706 871,522 2,151,911

Earnings per share-Basic 2 7.53p 5.34p 13.08p

Earnings per share-Diluted 2 7.12p 4.90p 12.11p

Unaudited Unaudited Audited

28 February 28 February 31 August 2015 2014 2014

£ £ £

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 1,441,445 1,141,123 1,219,983

CURRENT ASSETS

Inventories 2,445,096 1,831,655 1,998,831

Trade receivables 3,008,620 1,933,902 4,339,755

Other receivables, deposits and prepayments 372,491 407,351 185,007

Amount owing by contract customers 959,518 1,884,811 949,197

Cash and cash equivalents 7,027,164 4,550,221 4,896,206

13,812,889 10,607,940 12,368,996

TOTAL ASSETS 15,254,334 11,749,063 13,588,979

EQUITY AND LIABILITIES

Called up share capital 168,357 163,470 167,757

Share premium account 2,436,910 2,336,528 2,385,910

Reconstruction reserve (11,284,500) (11,284,500) (11,284,500)

Merger relief reserve 11,390,000 11,390,000 11,390,000

Retained earnings 8,687,650 6,537,891 7,666,718

TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF

THE COMPANY AND TOTAL EQUITY 11,398,417 9,143,389 10,325,885

NON-CURRENT LIABILITIES

Deferred tax liabilities 133,731 117,048 79,273

CURRENT LIABILITIES

Trade and other payables 3,420,627 2,251,536 2,913,843

Derivative financial instrument 41,790 - -

Provision for taxation 259,769 237,090 269,978

3,722,186 2,488,626 3,183,821

TOTAL LIABILITIES 3,855,917 2,605,674 3,263,094

TOTAL EQUITY AND LIABILITIES 15,254,334 11,749,063 13,588,979

Share Share Merger Reconstruction Retained Total

capital premium relief reserve profits equity

reserve

£ £ £ £ £ £

At 31 August 2014 167,757 2,385,910 11,390,000 (11,284,500) 7,666,718 10,325,885

Share based payment - - - - 7,861 7,861

reserve

Profit after taxation and

Total comprehensive

Income for the financial year - - - - 1,264,706 1,264,706

Dividend paid - - - - (251,635) (251,635)

Issue of shares, net of share 600 51,000 - - - 51,600

issue costs

At 28 February 2015 168,357 2,436,910 11,390,000 (11,284,500) 8,687,650 11,398,417

At 31 August 2013 163,070 2,302,528 11,390,000 (11,284,500) 5,650,416 8,221,514

Share based payment - - - - 15,953 15,953

reserve

Profit after taxation and

Total comprehensive

Income for the financial year - - - - 871,522 871,522

Issue of shares, net of share 400 34,000 - - - 34,400

issue costs

At 28 February 2014 163,470 2,336,528 11,390,000 (11,284,500) 6,537,891 9,143,389

At 31 August 2013 163,070 2,302,528 11,390,000 (11,284,500) 5,650,416 8,221,514

Share based payment - - - - 27,861 27,861

reserve

Profit after taxation and

Total comprehensive

Income for the financial year - - - - 2,151,911 2,151,911

Dividend paid - - - - (163,470) (163,470)

Issue of shares, net of share 4,687 83,382 - - - 88,069

issue costs

At 31 August 2014 167,757 2,385,910 11,390,000 (11,284,500) 7,666,718 10,325,885

Unaudited Unaudited Audited

6 months 6 months Year

ended ended ended

28 February 28 February 31 August 2015 2014 2014

£ £ £

Cash flow from operating activities

Profit before taxation 1,506,392 1,164,374 2,676,966

Adjustments for:-

Depreciation of property, plant and equipment 86,036 57,234 135,645

Loss on sale of property, plant and equipment - - 257

Finance income and costs 41,790 - -

Interest income (22,515) (16,362) (25,692)

Share based payment 7,861 15,953 27,861

Operating cash flows, before

working capital changes 1,619,564 1,221,199 2,815,037

Decrease/(increase) in inventories (446,265) (345,265) (512,441)

Decrease/(increase) in trade and

other receivables 1,133,330 (1,089,891) (2,337,786)

(Decrease)/increase in other payables 506,784 (911,557) (249,250)

Cash flow (used in) / from operations 2,813,413 (1,125,514) (284,440)

Interest received 22,515 16,362 25,692

Income tax paid (197,437) (178,955) (416,046)

Net cash flow (used in) / from operating 2,638,491 (1,288,107) (674,794)

activities

Cash flow used in investing activities

Purchase of property, plant and equipment (307,498) (186,248) (344,942)

Sale of property, plant and equipment - - 1,167

Net cash flow used in investing activities (307,498) (186,248) (343,775)

Cash flow used in financing activities

Dividends paid (251,635) - (163,470)

Proceeds from issue of share capital, net of share 51,600 34,400 88,069

issue costs

Net cash flow from/(used in) financing activities (200,035) 34,400 (75,401)

Net (decrease) / increase in cash and cash 2,130,958 (1,439,955) (1,093,970)

equivalents

Cash and cash equivalents at beginning of period 4,896,206 5,990,176 5,990,176

Cash and cash equivalents at end of period 7,027,164 4,550,221 4,896,206

1. Basis of preparation

The Company is a public limited company limited by shares and incorporated under the UK Companies Act. The Company is domiciled in the United Kingdom and the registered office and principal place of business is Holt Road, Bradford upon Avon, Wiltshire, BA15 1AJ.

The principal activity is the specialised area of design and manufacture of test equipment for vehicle suspension, steering, noise and vibration. The company also offers a range of services which include analysis, design, prototype manufacture, testing and development.

The interim financial information has been prepared in accordance on the basis of the accounting policies set out in the annual report and accounts for the year ended 31 August 2014, which have been prepared in accordance with International Financial Reporting Standards as adopted for use by the European Union. The interim accounts are unaudited and do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.

The same accounting policies, presentation and methods of computation have been followed in this unaudited interim financial information as those which were applied in the preparation of the Group's annual statements for the year ended 31 August 2014, upon which the auditors issued an unqualified opinion, and which have been delivered to the registrar of companies.

The interim financial information has been drawn up using accounting policies and presentation expected to be adopted in the Group's full financial statements for the year ended 31 August 2015. Any new standards that will be adopted in full for the first time in the year-end financial statements did not have a material impact on this interim financial information.

The interim financial information for the six months ended 28 February 2015 was approved by the Board on 27^th April 2015.

The Directors are declaring an interim dividend of 1.1p per ordinary share. The ex-dividend date will be 7^th May, the record date 8^th May and the payment date 22^nd May 2015.

2. Earnings per share

The calculation of earnings per share is based on the following earnings and number of shares:

Unaudited Unaudited Audited

6 months 6 months Year

ended ended ended

28 February 28 February 31 August 2015 2014 2014

£ £ £

Profit after tax attributable to

owners of the company 1,264,706 871,522 2,151,911

Weighted average number of shares

Basic 16,804,480 16,322,446 16,452,254

Diluted 17,772,645 17,772,645 17,772,645

Earnings per share

Basic 7.53 pence 5.34 pence 13.08 pence

Diluted 7.12 pence 4.90 pence 12.11 pence

3. Analysis of revenue by geographical area and major customers

Material revenues attributable to individual foreign countries are as follows:

	Unaudited 6 months ended February 2015	Unaudited 6 months ended February 2014	Audited Year ended August 2014
	£	£	£
United Kingdom	198,041	1,030,456	1,705,775
Rest of the European Union	2,632,580	2,109,872	3,752,538
North America	742,440	555,268	1,388,510
Rest of the World	3,985,954	2,998,864	6,999,739
	7,559,015	6,694,460	13,846,562

Revenues derived from major customers, which individually represent 10% or more of total Company revenue are as follows:

	Unaudited 6 months ended February 2015	Unaudited 6 months ended February 2014	Audited Year ended August 2014
	£	£	£
Customer A	85,785	930,522	1,411,745
Other customers	7,473,230	5,763,938	12,434,817
	7,559,015	6,694,460	13,846,562

There were no material non current assets located outside the United Kingdom.

Revenues are derived from the following:


Revenue from sale of goods	5,984,379	4,525,466	9,609,493
Revenue from construction contracts	1,574,636	2,168,994	4,237,069
	7,559,015	6,694,460	13,846,562

4. Share Capital

On 3^rd December 2014 the Company announced that Cairn Financial Advisers LLP had exercised warrants to subscribe for 60,000 new ordinary shares of 1p each at a price of 86 pence per share. These warrants were granted to Cairn at the time of the Company's admission to AIM in May 2013. Following the issue of the new ordinary shares the company's enlarged issued share capital now comprises 16,835,640 shares.