Interim Results

RNS Number : 1829D

AB Dynamics PLC

25 April 2017

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

Interim Results for the 6 months ended 28 February 2017

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 2017.

Financial Highlights

· Revenues increased 9% to £11.0m (H1 2016: £10.1m)

· Profit before tax, excluding share option costs, increased 9% to £2.5m (H1 2016: £2.3m)

· Increased capital expenditure of £2.6m (H1 2016: £0.3m) in line with management expectations

· Net cash at 28 February 2017 of £14.8m (H1 2016: £10.2m)

· Basic EPS adjusted for share option costs of £0.8m increased to 11.04p (H1 2016: 10.53p)

· Interim dividend increased 10% to 1.331p per ordinary share (H1 2016: 1.21p)

Operational Highlights

· Successful equity fundraising of £6 million to fund new product development and investment in supporting activities to drive growth

· Very strong demand for Guided Soft Targets following regulatory approval for their use in global Advanced Driver Assistance Systems ('ADAS') testing

· Demand for Driving Robots at an all time high

· Advanced Vehicle Dynamic Simulator project nearing commercialisation phase

· New factory build on target for late summer hand over

· Tim Rogers appointed as Chief Executive Officer

Tim Rogers, CEO of AB Dynamics, commented:

"We are very pleased to report on a solid first half of the financial year. We have a good forward order book for the remainder of 2017 and well in to next year which gives us confidence in meeting market expectations.

"The Group continues to invest in people, products and facilities, reaching a landmark of 100 employees. Separate commercial and business development teams have been established to create a group structure capable of supporting our large and growing customer base, whilst delivering new products and services to our customers.

"The Board is pleased to announce the increased dividend to shareholders of 1.331p per ordinary share which underlines the strength of the business and future prospects."

For further information please contact:

AB Dynamics plc Tim Rogers, Chief Executive Officer Tony Best, Non-executive Chairman	01225 860 200
Cairn Financial Advisers LLP (Nomad) Tony Rawlinson Liam Murray	0207 213 0880
Cantor Fitzgerald Europe (Broker) David Foreman Phil Davies	0207 894 7000
IFC Advisory (PR) Tim Metcalfe Graham Herring Heather Armstrong	0203 053 8671

Chief Executive's and Chairman's Statement

We are pleased to report on a successful first half of the financial year for AB Dynamics. A strong commercial performance across our business platforms have resulted in profit before tax (excluding share option costs of £0.8m) for the half year to 28 February 2017, of £2.5 million (H1 2016: £2.3 million) an increase of 9% and revenues of £11.0 million (H1 2016: £10.1 million) an increase of 9% over the prior year's first half. Cash at the period end was £14.8 million (H1 2016: £10.2 million).

The Group sees strong demand for its products and services, notably from sales of its Guided Soft Targets (GST), which have uniquely benefited from obtaining approvals from both of the key vehicle safety organisations in Europe (EuroNCap) and the US (NHTSA) for vehicle ADAS testing. This gives our customers access to a genuinely global testing platform which seamlessly integrates with the Company's other Track Testing products for development of ADAS and next generation autonomous vehicles.

Favourable currency conditions and further improvements to our manufacturing infrastructure and supply side have also helped maintain our operating margin, adjusted for share option charges, at 22%.

The Company continues to invest and expand its design, manufacturing and customer support capacity. Separate commercial and business development teams have been established to create a group structure capable of supporting our large and growing customer base, whilst delivering new products and services to our customers.

The new facility is targeted to come on line in late summer freeing up valuable manufacturing space and creating necessary product development areas required to create the new laboratory test equipment that will drive the Company's growth.

As mentioned previously the building will improve significantly the working environment and bring our UK operations together again under one roof, creating the necessary headroom for future growth. The investment in the new factory will be funded entirely from the Group's cash resources over the next six months as the build programme gathers momentum.

Towards the end of 2016 we successfully completed an equity fundraising of £6 million enabling us to embark upon a number of new product development programmes including the Advanced Vehicle Dynamic Simulator, a Driver in Loop Simulator developed in collaboration with Williams WAE which is nearing the commercialisation phase. Other laboratory test machinery is in development, together with a raft of new Track Testing Robot upgrades and enhancements already introduced this year to provide support to the businesses in which we are the largest supplier.

The Company has seen an increase in demand for its track testing products and together with its forward order book has secured a sales pipeline for the remainder of this financial year and well into the next. Looking ahead, the Company continues to invest and develop new products and technologies which will secure the Company's future.

We are pleased to announce that the Directors are declaring an interim dividend of 1.331p per ordinary share. The ex-dividend date will be 4 May with a record date of 5 May and payment date 19 May 2017.

Anthony Best

Non-executive Chairman

24 April 2017

Tim Rogers

Chief Executive Officer

24 April 2017

AB Dynamics plc

Unaudited consolidated statement of comprehensive income

for the six months ended 28 February 2017

		Unaudited 6 months ended 28 February 2017 £	Unaudited 6 months ended 29 February 2016 £	Audited Year ended 31 August 2016 £
	Notes

Revenue		11,001,085	10,108,702	20,472,244
Cost of sales		(8,302,273)	(7,070,977)	(14,296,445)

Gross profit		2,698,812	3,037,725	6,175,799
Administrative expenses		(1,030,824)	(786,865)	(1,635,977)
Fair value (losses) / gains in respect of foreign currency forward contracts		(59,241)	(33,428)	(161,145)
Operating profit		1,608,747	2,217,432	4,378,677
Net finance income and (costs)		43,010	45,084	72,643

Profit before taxation		1,651,757	2,262,516	4,451,320
Income tax expense		(430,923)	(437,837)	(576,935)

Profit after taxation and total comprehensive income for the period		1,220,834	1,824,679	3,874,385

Earnings per share-Basic	2	6.65p	10.53p	22.25p
Earnings per share-Diluted	2	6.61p	10.27p	22.25p

AB Dynamics plc

Unaudited consolidated statement of financial position

for the six months ended 28 February 2017

	Unaudited 28 February 2017 £	Unaudited 29 February 2016 £	Audited 31 August 2016 £

ASSETS
NON-CURRENT ASSETS
Property, plant and equipment	5,181,045	1,959,887	2,695,097
Deferred tax assets	-	138,235	-

	5,181,045	2,098,122	2,695,097

CURRENT ASSETS
Inventories	3,780,447	2,949,435	3,191,642
Trade receivables	3,121,141	2,836,729	2,601,857
Other receivables, deposits and prepayments	1,285,884	638,905	1,006,657
Amount owing by contract customers	1,205,473	550,805	1,285,922
Derivative financial instruments	-	315	-
Taxation	-	-	148,992
Cash and cash equivalents	14,776,087	10,145,882	10,404,523

	24,169,032	17,122,071	18,639,593

TOTAL ASSETS	29,350,077	19,220,193	21,334,690

EQUITY AND LIABILITIES
Called up share capital	191,119	173,344	177,646
Share premium account	8,579,264	2,540,711	2,590,267
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	16,347,092	12,483,120	14,643,035

TOTAL EQUITY ATTRIBUTABLE TO OWNERS OF THE COMPANY AND TOTAL EQUITY	25,222,975	15,302,675	17,516,448

NON-CURRENT LIABILITIES
Deferred tax liabilities	53,648	-	118,946

CURRENT LIABILITIES
Trade and other payables	3,856,571	3,571,362	3,608,862
Derivative financial instrument	58,165	-	90,434
Provision for taxation	158,718	346,156	-

	4,073,454	3,917,518	3,699,296

TOTAL LIABILITIES	4,127,102	3,917,518	3,818,242

TOTAL EQUITY AND LIABILITIES	29,350,077	19,220,193	21,334,690

AB Dynamics plc

Unaudited statement of changes in equity

for the six months ended 28 February 2017

	Share capital	Share premium	Merger relief reserve	Reconstruction reserve	Retained profits	Total equity
	£	£	£	£	£	£
At 31 August 2016	177,646	2,590,267	11,390,000	(11,284,500)	14,643,035	17,516,448

Share based payment expense	-	-	-	-	805,649	805,649

Profit after taxation and Total comprehensive Income for the financial year	-	-	-	-	1,220,834	1,220,834

Dividend paid	-	-	-	-	(322,426)	(322,426)

Issue of shares, net of share issue costs	13,473	5,988,997	-	-	-	6,002,470

At 28 February 2017	191,119	8,579,264	11,390,000	(11,284,500)	16,347,092	25,222,975

At 31 August 2015	173,344	2,540,711	11,390,000	(11,284,500)	10,830,329	13,649,884

Share based payment Expense	-	-	-	-	3,237	3,237

Deferred Tax on Share Options	-	-	-	-	110,892	110,892

Profit after taxation and Total comprehensive Income for the financial year	-	-	-	-	1,824,679	1,824,679

Dividend paid					(286,017)	(286,017)

At 29 February 2016	173,344	2,540,711	11,390,000	(11,284,500)	12,483,120	15,302,675

At 31 August 2015	173,344	2,540,711	11,390,000	(11,284,500)	10,830,329	13,649,884

Share based payment expense	-	-	-	-	273,405	273,405

Deferred Tax on Share Options	-	-	-	-	(168,387)	(168,387)

Profit after taxation and Total comprehensive Income for the financial year	-	-	-	-	3,874,385	3,874,385

Tax impact of exercised Share Options	-	-	-	-	329,066	329,066

Dividend paid					(495,763)	(495,763)

Issue of shares, net of share issue costs	4,302	49,556	-	-	-	53,858

At 31 August 2016	177,646	2,590,267	11,390,000	(11,284,500)	14,643,035	17,516,448

AB Dynamics plc

Unaudited cash flow statement

for the six months ended 28 February 2017

	Unaudited 6 months Ended 28 February 2017	Unaudited 6 months Ended 29 February 2016	Audited Year Ended 31 August 2016
	£	£	£

Cash flow from operating activities Profit before taxation	1,651,757	2,262,516	4,451,320

Adjustments for:-
Depreciation of property, plant and equipment	125,533	105,342	277,695
Loss on sale of property, plant and equipment	4,242	391	2,336
Finance income and costs	(32,270)	33,428	-
Interest income	(43,010)	(45,084)	(72,643)
Share based payment	805,649	3,237	273,405

Operating cash flows, before working capital changes	2,511,901	2,359,830	4,932,113

Decrease/(increase) in inventories	(588,804)	(407,731)	(649,939)
Decrease/(increase) in trade and other receivables	(718,061)	564,338	(303,657)
(Decrease)/increase in other payables	247,710	481,875	519,375
Fair value loss/(gain) on derivative instruments	-	-	124,178

Cash flow (used in) / from operations	1,452,746	2,998,312	4,622,070
Interest received	43,010	45,084	72,643
Income tax paid	(188,513)	(241,034)	(568,314)

Net cash flow (used in) / from operating activities	1,307,243	2,802,362	4,126,399

Cash flow used in investing activities
Purchase of property, plant and equipment	(2,615,723)	(338,271)	(1,608,527)
Sale of property, plant and equipment	-	-	360,748

Net cash flow used in investing activities	(2,615,723)	(338,271)	(1,247,779)

Cash flow used in financing activities
Dividends paid	(322,426)	(286,017)	(495,763)
Proceeds from issue of share capital, net of share issue costs	6,002,470	-	53,858

Net cash flow from/(used in) financing activities	5,680,044	(286,017)	(441,905)

Net (decrease) / increase in cash and cash equivalents	4,371,564	2,178,074	2,436,715
Cash and cash equivalents at beginning of period	10,404,523	7,967,808	7,967,808

Cash and cash equivalents at end of period	14,776,087	10,145,882	10,404,523

AB Dynamics plc

Notes to the unaudited interim report

for the six months ended 28 February 2017

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 with the basis of the accounting policies set out in the annual report and accounts for the year ended 31 August 2016, 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 2016, 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 2017. 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 2017 was approved by the Board on 24 April 2017.

The Directors are declaring an interim dividend of 1.331p per ordinary share. The ex-dividend date will be 4 May, the record date 5 May and the payment date 19 May 2017.

2. Earnings per share

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

	Unaudited 6 months ended 28 February 2017	Unaudited 6 months ended 29 February 2016	Audited Year Ended 31 August 2016
	£	£	£

Profit after tax attributable to owners of the Company	1,220,834	1,824,679	3,874,385

Weighted average number of shares
Basic	18,351,725	17,334,406	17,414,329
Diluted	18,472,797	17,772,645	17,414,329

Earnings per share
Basic	6.65 pence	10.53 pence	22.25 pence
Diluted	6.61 pence	10.27 pence	22.25 pence

3. Analysis of revenue by geographical area and major customers

Revenues attributable to individual foreign countries are as follows:

	Unaudited 6 months ended February 2017	Unaudited 6 months ended February 2016	Audited Year ended August 2016
	£	£	£
United Kingdom	405,771	86,993	379,418
Rest of the European Union	2,908,371	3,209,516	6,241,564
North America	2,449,020	1,145,398	3,099,983
Rest of the World	5,237,923	5,666,795	10,751,279
	11,001,085	10,108,702	20,472,244