AB Dynamics Regulatory News (ABDP)

28 September 2021

AB Dynamics plc

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

Pre-close Trading Update

Launch of ABD Solutions

AB Dynamics plc (AIM: ABDP), the provider of advanced testing systems, simulation products and testing services to the global automotive and mobility sectors, provides the following trading update and details of the launch of ABD Solutions in advance of the publication of its results for the year ended 31 August 2021 ("FY21").

Business performance

The Group performed well during the second half of the year, managing supply chain disruption and currency headwinds effectively in order to meet the strengthening in demand during the period. Revenue for the second half of the year was approximately 20% higher organically than the COVID-impacted H2 2020 and approximately 40% higher on a reported basis, including the contribution from Vadotech Group ("Vadotech") which was acquired in March 2021.

As a result, the Board expects to report revenue for FY21 of ca.£65m. With the business responding well to the continued recovery, reflecting the impact of the strategic enhancement initiatives implemented in the last 18 months, the Board anticipates that the Group will deliver full year adjusted operating profit for FY21 in line with current consensus expectations.

The Group delivered strong operating cash inflow through the second half, with net cash at 31 August 2021 of £22.3m (2020: £30.0m), after investing €20.0m (£17.3m) in the acquisition of Vadotech and continued capital investment in new product development, the new Engineering Design Centre, ERP software and expansion of the track testing facility in California, totalling £8.2m in the year.

Further progress continues to be made on implementation of management's strategic initiatives to enhance commercial and operational capability and provide AB Dynamics with a platform for sustainable long-term growth. Regional leadership teams have now been established to cover core overseas markets with the appointment of a President and CFO for the Asia Pacific region as well as President for the North America region. The Board is pleased with the performance of Vadotech, with the business performing in line with expectations at the time of acquisition.

Notwithstanding a challenging backdrop generally, the Group has seen a continued recovery in demand through the second half across all key product and service lines, which demonstrates the resilience of ABD's markets. Despite the significant uplift in sales during the second half, orders exceeded revenues in the period and the business enters FY22 with good momentum.

Launch of ABD Solutions

Alongside the implementation of specific initiatives to improve and enhance business performance, the Board has undertaken an extensive exercise to identify routes to extend the Group's potential to leverage its market-leading capabilities into new, long-term growth opportunities. The successful acquisitions of rFrpo, DRI and Vadotech, together with continued internal development work, have significantly extended the Group's geographical reach and offering across product, service and software capabilities. In light of this, the Board is seeking to capture greater value from the depth of the Group's expertise in its core capabilities of integrated automation and simulation.

In line with this strategy, AB Dynamics is pleased to announce the launch of ABD Solutions (www.abdsolutions.com), a new business unit focused on providing retrofit solutions that enable the automation of conventional off-road vehicle fleets rapidly and cost effectively.

ABD Solutions leverages and builds on the core capabilities of AB Dynamics in driving robotics, positioning and control to rapidly convert vehicle applications where safety and/or efficiency is the primary market driver. ABD Solutions will focus on four core market sectors, for which conversion kits are already in development;

· Mining;

· Defence;

· Agriculture; and

· Material handling.

The formation of ABD Solutions and the identification of the four core market sectors is based on extensive market analysis and research which shows a total potential market of approximately £4.8bn, with an estimated compound annual growth rate of approximately 25%, of which the Group will be targeting specific segments. Each individual market sector has specific market drivers; however, the common elements are the need for improved operational safety and productivity. This greatly expands the existing addressable market of the Group and has the potential to diversify the business significantly beyond its core automotive focus.

The ABD Solutions team consists of talented employees from both AB Dynamics and new external hires with expertise in localisation, positioning, object detection and artificial intelligence. The new business has already identified several large-scale development opportunities in both the UK and Asia Pacific and more details of the relevant markets and applications will be provided at the full year results. The investment required during 2022 is expected to total approximately £1.0m - £1.5m, with modest revenues commencing in 2023, and significant incremental growth opportunities thereafter.

Notice of results

The Group will announce its results for the year ended 31 August 2021 on Wednesday 24 November 2021. 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.

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.

Enquiries:

The person responsible for arranging the release of this information is Felicity Jackson, Company Secretary.

About AB Dynamics plc

AB Dynamics is a leading designer, manufacturer and provider of advanced testing systems, simulation products and testing services to the global automotive research and development and mobility sectors.

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.