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AB Dynamics PLC   -  ABDP   

Final Results

Released 07:00 27-Nov-2019

RNS Number : 7601U
AB Dynamics PLC
27 November 2019
 

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY THE COMPANY TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE EU MARKET ABUSE REGULATION (596/2014). UPON THE PUBLICATION OF THE ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

27 November 2019

AB Dynamics plc

Final Results for the Year Ended 31 August 2019

"Strong growth and delivery against strategic priorities"

AB Dynamics plc ("AB Dynamics", the "Company" or the "Group"), the designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive market, is pleased to announce its final results for the year ended 31 August 2019.

 

 

Audited

2019

£m

Audited

2018

£m

 

Revenue

58.0

37.1

+56%

Adjusted operating profit1

13.5

8.5

+58%

Adjusted operating margin

23.3%

23.1%

+20 bps

Adjusted profit before tax1

13.7

8.6

+59%

Statutory operating profit

10.8

7.9

+37%

Statutory profit before tax

11.0

7.9

+38%

Statutory profit after tax

9.6

7.0

+38%

Adjusted cash flow from operations1

10.5

9.9

+6%

Net cash

36.2

15.9

+127%

 

Pence

Pence

 

Adjusted diluted earnings per share1

55.4

36.9

+50%

Basic earnings per share

42.9

36.3

+18%

Fully diluted earnings per share

42.1

35.0

+20%

Total dividend per share

4.40

3.67

+20%

Financial Highlights

 

·      Revenue and adjusted operating profit increased 56% and 58%, respectively through increased demand for the Group's products and services, supported by new product development and establishment of international routes to market.

·      Underlying revenues increased by 55% with a small 1% benefit from the acquisition of rFpro at the end of June 2019.

·      Adjusted operating margins increased by 20 bps to 23.3% as a result of operating leverage across the business.

·      Adjusted profit before tax increased by 59% to £13.7m and the corresponding adjusted diluted EPS increased by 50% as the adjusted effective corporation tax rate increased to 16.8% (2018: 14.1%).

·      Adjusted cash flow from operations increased by 6% to £10.5m with cash conversion of 78% after investment in working capital.

·      Total dividend increased by 20% to 4.40p per share as a result of a strong performance and confidence in the Group's outlook.

Operational Highlights

 

·      Introduction of updated strategic priorities setting out the Group's plans for long term, sustainable growth

·      Establishment of new international routes to market in the USA and Japan.

·      In Track Testing, the launch of additional new products including Ground Traffic Control software for proving ground automation, TrackFi Powermesh advanced radio system and heavy-duty versions of both the Guided Soft Target and Launchpad ADAS targets.

·      In Laboratory Testing and Simulation, the Group has further developed the aVDS simulation market with key strategic sales and development of increased product functionality whilst launching the new ANVH 250 product line.

·      Construction commenced on a new 2,850m2 facility for new product development and simulation.

·      Following a successful share placing in May 2019, raising net proceeds of £48.2m, acquisition expenditure totalled £35.4m with £18.1m on rFpro and £17.3m on Dynamic Research Inc.

Commenting on the full year results, Dr James Routh, Chief Executive Officer said:

 

"The Group's performance in 2019 was very strong, delivered through continued development of new products and services to a buoyant market for Advanced Driver Assistance Systems and autonomous vehicle development.  AB Dynamics delivered another year of strong growth in adjusted earnings per share whilst simultaneously initiating the delivery of the Group's updated strategic priorities, including the acquisitions delivered during the second half.  Despite global macro-economic uncertainty and challenges facing the automotive sector, the Board remains confident that the Group will continue to deliver further growth in the coming year."

 

 

Enquiries:

AB Dynamics plc

01225 860 200

Tony Best, Chairman

Dr James Routh, Chief Executive Officer

Sarah Matthews-DeMers, Chief Financial Officer

Mat Hubbard, Chief Technology Officer

 

 

Cairn Financial Advisers (Nomad)

0207 213 0880

Tony Rawlinson

Liam Murray

Ludovico Lazzaretti

 

 

Cantor Fitzgerald Europe (Broker)

0207 894 7000

 

Phil Davies, David Foreman (Corporate Finance)

Caspar Shand Kydd, Keith Dowsing, Arthur Gordon (Equity Sales)

 

 

 

 

Tulchan Communications                                                      

0207 353 4200

James Macey White

Matt Low

 

Deborah Roney

 

 

 

 

 

About AB Dynamics plc

 

AB Dynamics is a leading designer, manufacturer and provider of advanced products for testing and verification of Advanced Driver Assistance Systems ("ADAS") technology, autonomous vehicle development and vehicle dynamics to the global automotive research and development sector. 

 

AB Dynamics is an international group of companies headquartered in Bradford-on-Avon.  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.

 

 

PRELIMINARY ANNOUNCEMENT OF FINAL RESULTS FOR YEAR ENDED 31 AUGUST 2019

 

CHAIRMAN'S STATEMENT

 

Overview

 

I am pleased to report that the Group has delivered its tenth successive year of record revenue and adjusted profit reflecting continued strong demand for our advanced testing systems and measurement equipment.  During the year the Group experienced a very favourable market background and reported revenues grew 56% to £58m and adjusted operating profit grew 58% to £13.5m. The outturn also benefited from our success in reducing our lead times, which had lengthened with strong levels of demand, to more appropriate levels.  We operate in markets that benefit from long-term structural and regulatory growth drivers, and against this positive backdrop our customers continue to develop ever more sophisticated Advanced Driver Assistance Systems and semi and fully autonomous vehicles that will be required in the future. The results are discussed in detail in the Chief Executives Review and in the Financial Review that follow.

 

In May 2019, the Group raised gross proceeds of £50.1m through a Placing of £45.1m, followed in June 2019 by the closing of an Open Offer of £5m, both of which were oversubscribed.  We were delighted by the response from existing and also new investors whom we were pleased to welcome to the Shareholder Register. At the time the Board signalled its intention to use the net proceeds from the fundraise to support the Group's strategy, updated earlier in the year.  The refreshed strategy, under the leadership of our CEO, has brought added focus to our new product development, our capability and capacity requirements to meet future growth, our international footprint, service and support functions, and opportunities for acquisitive growth.

 

Following the capital raise, the opportunity arose to acquire two complementary and attractive businesses with whom we had previously worked very closely for a number of years. In June 2019, we were pleased to announce the acquisition of rFpro, Kangaloosh Limited, for a maximum consideration of up to £21.6m and at the end of August 2019 the purchase of Dynamic Research Incorporated ('DRI') for a maximum consideration of up to US$24.5m.  Both businesses are firmly aligned to our acquisition criteria, with rFpro adding important engineering grade simulation software and highly accurate digital replicas of public roads, test tracks and racing circuits, and DRI who are experts in testing ADAS and vehicle dynamics, alongside the manufacture of a range of products for use in ADAS testing. I have much pleasure in welcoming the staff of both organisations to AB Dynamics.

 

International footprint and manufacturing facilities

 

We continue to invest in our manufacturing capacity and international footprint, our capabilities and our people. During the year we commenced operations from new facilities in Germany and the USA and as part of our international expansion we intend to establish Group operations in other key markets, including Japan where we are currently transitioning activities inhouse.

 

As we have previously announced the Group has now received full planning permission for a new 2,850m2 facility adjacent to our existing headquarters in Bradford-on-Avon that will be used as a simulation centre of excellence and for engineering research and development. Ground work has begun with completion expected in Q4 2020. In addition, the Board has approved the consolidation of activities currently located in a number of smaller locations into a single operational site.  The Group has purchased a 2.5 acre site on the outskirts of Melksham, approximately 5 miles from our main operations, on which we plan to build a new production facility. Building work is expected to commence in FY2021 and will take approximately 12 months to complete.

 

Board changes

 

Dr. James Routh joined the Group on 1 October 2018 as Chief Executive Officer.  James has brought strong leadership and a wealth of relevant experience to the Group and it has been a great pleasure to welcome him to AB Dynamics and the Board. 

 

On 13 February 2019 it was announced that Robert Hart had informed the Group of his intention to step down from his role as Chief Financial Officer and from the Board after ten years with AB Dynamics.  I would like to thank Rob for his contribution to the success of the Group over the years up to and since our AIM IPO in 2013. As previously announced, Sarah Matthews-DeMers has been appointed as Chief Financial Officer with effect from 4 November 2019.  Sarah brings extensive experience of financial management in public companies, investor relations and strategic development and I am delighted she has joined AB Dynamics.

 

Bryan Smart has also informed the Board of his intention to step down from his position as Chairman of the Audit and Risk Committee and retire from the Board at the AGM in January 2020.  I would like to thank Bryan for his support and contribution to the development of the Group over the years since our flotation. The Board has begun the search for a suitable replacement and has also taken the decision to look to appoint a Non-Executive Director with relevant industry experience.

 

I would also like to thank each of our Non-Executive Directors for their continued wise counsel and contribution to the success of the Group during the year.

 

Corporate governance

 

The Board is united in its view that robust corporate governance and risk management are essential to maintaining the stability and growth of the Group and its financial health.  I am pleased to confirm that AB Dynamics has adopted the Quoted Companies Alliance ('QCA') code and a statement of compliance is set out on our AIM Rule 26 website.  Further details of the Group's approach to governance and its procedures are included in the Annual Report for the year ended 31 August 2019.

 

Our employees

 

I would like to thank all our employees for their continued hard work and professionalism over a very busy year. At its heart AB Dynamics is a people business and it is the contribution and performance of our talented employees that underpins our undoubted achievements. As we have grown, we have welcomed a significant number of new staff to the Group and we now have 264 employees (FY2018: 145), including employees of rFpro and DRI.  I am pleased to say that we continue to attract the talent that we require to develop the increasingly complex new products that will be demanded by both our long standing and newly emerging customers.

 

Dividend

 

The Board is recommending a final dividend of 2.79p per share payable on 13 February 2020 subject to shareholder approval at the AGM. The ex-dividend date will be 2 January 2020 and the record date will be 3 January 2020. The total dividend for the year will therefore be 4.40p per share which is an increase over the prior year of 20%. The Board expects to continue to pursue a progressive dividend policy in the future.

 

Outlook

 

AB Dynamics operates in long-term growth markets and has established a unique position as a leading designer, manufacturer and supplier of advanced testing and simulation solutions to the automotive industry globally. We continue to invest heavily into new product development that is critical to our future success and it is particularly pleasing therefore to report that we have now received a third order for our advanced Vehicle Driving Simulator ('aVDS'). We expect simulation to play an increasingly important and critical part in the development of semi and fully autonomous vehicles in the future as manufacturers will need to evaluate their vehicles extensively under large numbers of complex scenarios to provide a safe environment for all road users.

 

As in previous years, we have a healthy order book that provides good forward visibility and will continue to invest in our capabilities and infrastructure which will tend to constrain our margins. Whilst we remain optimistic about our prospects and the Group's future, we do remain alert to the continued difficulties faced by many of our customers selling into the global automotive market.

 

CHIEF EXECUTIVE'S REVIEW

 

Overview

 

AB Dynamics has delivered a record year of highly profitable growth whilst implementing its recently announced evolved strategy for long-term sustainable growth. The Group has continued to develop and launch new products to meet the rapidly changing market conditions in the test and verification of both conventional and autonomous vehicle development. In parallel the Group has enhanced its capabilities and capacities to support the current and anticipated growth.

 

Financial performance

 

In 2019, the Group delivered strong reported revenue growth of 56% to £58.0m (2018: £37.1m) and the acquisition of rFpro towards the end of the year contributed 1%, with underlying revenue growth of 55%.

Group adjusted operating profit increased 58% to £13.5m (2018: £8.5m) resulting in an improvement in adjusted operating margins of 20 bps to 23.3% (2018: 23.1%). This is in line with guidance provided at the half year detailing our planned increase in operating costs to support our growth strategy.

 

Gross margins have increased by 100 bps to 48.2% due to growth in relatively higher margin track testing sales compared to the prior year comparative. During the second half of the year, the Group implemented planned operating cost increases to invest in product development, the establishment of both US and Japan offices and building the management team. Attractive operating margins were maintained due to strong sales growth.

 

The Group delivered adjusted operating cash flow of £10.5m. The net cash position at year end increased +127% to £36.2m (2018: £15.9m). Excluding the cash raised via the share placing in May 2019 and the subsequent acquisitions of rFpro and DRI, underlying net cash increased by £3.3m to £19.2m.

 

Sector review

 

The track testing sector delivered strong revenue growth of 50% to £49.8m (2018: £33.3m) through continued demand from all sectors for our range of driving robots and ADAS platforms. Driving robot sales grew 43% to £30.1m (2018: £21.1m) through across the board demand, but particular growth in Asia Pacific and the USA. ADAS platforms grew by 66% to £19.7m (2018: £11.9m) with the new LaunchPad platform for Vulnerable Road Users ('VRU') gaining significant market traction complemented by continued growth of the Guided Soft Target platform. The increased proportion of ADAS platform sales is as expected as the market moves towards testing of multi-object scenario-based tests which utilise a higher quantity of interaction vehicles and VRUs.

 

For the laboratory testing and simulation sector, revenues grew by 118% to £8.2m (2018: £3.7m) with strong growth in our sales of Suspension Parameter Measurement Machines ('SPMM') and aVDS sales increasing, particularly with the successful order and technical partnership formed with Alfa Romeo Formula 1 team. On an underlying basis, excluding the small revenue contribution from rFpro, revenues grew by 99%.

 

The market for SPMM improved during FY2019, particularly as demand from China has increased as new automotive OEMs required kinematics and compliance measurement capabilities.  The simulation sector continues to develop as vehicle manufacturers recognise the need for both driver-in-the-loop simulation and driverless simulation in order to accelerate the development of active safety systems and semi-autonomous driving technology.  The motorsport market continues to develop as the utilisation of high frequency response motion-based simulation can provide significant competitive advantages.

  

Progress on our strategy

 

The Group has made good progress against our strategic priorities. The Group has delivered a number of new products to the market during the year, including the Ground Traffic Control proving ground automation software, heavy duty versions of both the GST and LaunchPad enabling testing of larger vehicles such as trucks and buses, and the development of an active system for motion cueing in our aVDS simulator. The acquisitions of both rFpro and DRI represent opportunities for further collaborative product development.

 

The management team has been restructured and developed to ensure we have the appropriate skills and experience to deliver the strategic priorities and construction has commenced on our new 'North Site' facility adjacent to our existing headquarters. Significant investment has been made in ensuring we have sufficient manufacturing capacity to maintain our growth and lead times were reduced in the first half of the year whilst maintaining the Group's focus on quality.

 

The Group has established three new international locations, expanding our footprint into strategically important markets. Combined with our recent acquisitions we now have nine locations across four countries to enable us to service our customers directly and ensure responsiveness and agility. New offices have been established in Japan (Yokohama), USA (Detroit) and Germany (Munich) complementing the existing locations in the UK (Bradford on Avon) and Germany (Giessen). The acquisitions have provided additional facilities in the UK (Romsey) and three in the USA (Torrance & Bakersfield, California and Ann Arbor, Michigan).

 

Towards the end of the year the Group introduced a new service and support offering which will be implemented during 2020 through our new international locations.

 

Acquisitions

 

Following the Group's successful share placing in May 2019 which raised net proceeds of ca. £48m we were able to pursue our strategic objective to acquire value enhancing, attractive acquisitions. During 2019 total acquisition spend was £35.4m of which £18.1m was invested in the acquisition of rFpro, a leading developer of engineering grade simulation software and digital twins. Immediately prior to the end of the financial year we invested £17.3m in the acquisition of Dynamic Research Inc, a leading supplier of automotive engineering test products and services to the US automotive sector.

 

The Group continues to seek value enhancing acquisitions and the pipeline of potential opportunities remains positive.

 

Summary

 

AB Dynamics reported another robust performance in 2019, delivering strong growth in revenue and earnings. Both the track testing and laboratory and simulation sectors contributed to this growth and this performance provides confidence for continued progress in the year ahead, particularly leveraging the Group's recently acquired businesses. We are aware of continued difficulties and potential delays in the automotive sector. However, with a proven business model coupled with long-term structural market growth drivers the outlook for AB Dynamics remains positive.

 

FINANCIAL REVIEW

 

The Group delivered strong revenue and profit growth during the year and also started to invest in the capability and capacity required to facilitate continued growth. This investment was funded from cash generated from operations. Cash raised from the issue of new shares was used to fund the acquisitions made during the year leaving net cash at the year end of £36.2m that will support further investment in the Group's capacity and future acquisitions.

 

Trading performance

 

Revenue increased by 56% to £58.0m (2018: £37.1m) driven by an increase in track testing revenue of 50% to £49.8m (2018: £33.3m) and laboratory testing and simulation revenue of 118% to £8.2m (2018: £3.7m).

 

Adjusted operating profit increased 58% to £13.5m (2018: £8.5m) while adjusted earnings before interest, tax, depreciation and amortisation ('EBITDA') increased 65% to £14.8m (2018: £9.0m).

 

Adjusted operating margin increased by 20 bps to 23.3% (2018: 23.1%) as the operating leverage from the additional revenue generated was used to invest in our infrastructure. After adding back depreciation and amortisation, this left return on sales (defined as EBITDA divided by revenue) of 25.1% (2018: 24.3%), an increase of 80 bps.

 

After net interest income of £0.2m (2018: £0.1m), adjusted profit before tax was £13.7m (2018: £8.6m).

The Group adjusted tax charge totalled £2.3m (2018: £1.2m), an adjusted effective tax rate of 16.8% (2018: 14.1%). The effective tax rate is lower than the current UK corporation tax rate due to allowances for research and development and Patent Box. In future years the effective tax rate is expected to increase as a proportion of profits are expected to be generated overseas in territories with higher tax rates than the UK. 

 

Adjusted diluted earnings per share were 55.4p (2018: 36.9p), an increase of 50%.

 

Adjustments totalled £2.7m (2018: £0.7m) of which £1.6m relates to acquisition fees, £0.6m to share based payments and £0.5m to fees to terminate agents as we brought our German distribution channel in-house. 

 

Statutory operating profit grew by 37% from £7.9m to £10.8m and after interest income of £0.2m (2018: £0.1m), statutory profit before tax was up 38% from £7.9m to £11.0m, giving statutory basic EPS of 42.9p (2018: 36.3p). The statutory tax charge was £2.3m (2018: £0.9m). A reconciliation of statutory to underlying non-GAAP financial measures is provided below.

 

Return on capital employed ('ROCE')

 

Our capital-efficient business and high margins enable generation of strong ROCE (defined as adjusted operating profit as a percentage of capital employed). However, in the years in which we acquire businesses or new properties, our capital base grows disproportionately with profit therefore the ratio will be impacted. This accounted for the decrease in ROCE in the year from 40.4% in 2018 to 18.7% in 2019.

 

Cash generation

 

Net cash at the end of the year was £36.2m (2018: £15.9m).

 

Operating activities generated adjusted cash inflow of £10.5m (2018: £9.9m) with cash conversion of 78% after net investment in working capital of £3.6m. After interest income of £0.2m and paying tax of £1.4m and dividends of £0.7m, this allowed us to invest £4.9m in property, plant and equipment and acquisition of intellectual property, leaving £3.1m (2018: £4.6m) free cash flow.

 

On 7 June 2019, a total of 2,050,000 new ordinary shares were placed for £22.00 and 227,500 new ordinary shares were admitted to trading on AIM following the issue of Open Offer Shares, raising total net proceeds of £48.2m. The exercise of share options added a further £1.6m. £35.4m of these proceeds were invested in the acquisition of rFpro and DRI (£32.8m net of cash acquired and expenses).

 

Acquisitions

 

On 27 June 2019, the Group completed the acquisition of Kangaloosh Limited (trading as 'rFpro') for initial consideration of £18.1m with deferred contingent consideration of up to £3.5m.

 

On 30 August 2019, the Group acquired 100% of the share capital of Dynamic Research, Incorporated for initial consideration of $21.0m with deferred contingent consideration of up to $3.5m.

 

The cash consideration was funded from the cash raised through the share placing and open offer completed during the year.

  

Research and development

 

While research and development forms a significant part of the Group's activities, a significant proportion relates to specific customer programmes which are included in the cost of the product. Other research and development costs, all of which have been written off to the profit and loss account as incurred total £0.8m (2018: £0.5m).

 

Foreign currency exposure

 

The Group faces currency exposure on its foreign currency transactions and, with the acquisition of DRI and international expansion of our sales offices, exposure to both foreign currency translation risk and transaction risk will increase.

 

The Group maintains a natural hedge whenever possible to transactional exposure by matching the cash inflows and outflows in the respective currencies wherever possible.

 

Alternative performance measures

 

In the analysis of the Group's financial performance and position, operating results and cash flows, alternative performance measures are presented to provide readers with additional information. The principal measures presented are adjusted measures of earnings including adjusted operating profit, adjusted operating margin, adjusted profit before tax, adjusted EBITDA and adjusted earnings per share.

 

The annual report includes both statutory and adjusted non-GAAP financial measures, the latter of which the Directors believe better reflect the underlying performance of the business and provide a more meaningful comparison of how the business is managed and measured on a day-to-day basis. The Group's alternative performance measures and KPIs are aligned to the Group's strategy and together are used to measure the performance of the business and form the basis of the performance measures for remuneration. Adjusted results exclude certain items because if included, these items could distort the understanding of the performance for the year and the comparability between the periods.

 

We provide comparatives alongside all current year figures. The term 'adjusted' is not defined under IFRS and may not be comparable with similarly titled measures used by other companies. All profit and earnings per share figures in this annual report relate to underlying business performance (as defined above) unless otherwise stated.

 

A reconciliation of adjusted measures to statutory measures is provided below:

 

 

2019

2018

 

Statutory

Adjustments

Adjusted

Statutory

Adjustments

Adjusted

 

 

 

 

 

 

 

Operating profit (£m)

10.8

2.7

13.5

7.8

0.7

8.5

Operating margin (%)

18.7

4.6

23.3

21.3

1.8

23.1

Profit before tax (£m)

11.0

3.7

13.7

7.9

0.7

8.6

Taxation (£m)

(2.3)

-

(2.3)

(0.9)

(0.3)

(1.2)

Profit after tax (£m)

8.7

2.7

11.4

7.0

0.4

7.4

Diluted earnings per share (pence)

42.1

13.3

55.3

35.0

1.9

36.9

Cash flow from operations

9.9

0.6

10.5

9.9

-

9.9

 

 

 

 

 

 

 

The adjustments comprise:

 

2019

2018

 

£m

£m

Acquisition related charges

1.6

-

Fees to terminate agent

0.5

-

Share based payment

0.6

0.7

Adjustments

2.7

0.7

 

 

 

 

PRINCIPAL RISKS & UNCERTAINTIES

 

The following section provides an overview of the principal risks and uncertainties that have the potential to impact the implementation of the Group's strategy and business model.

 

Strategic

Risk

Description

Mitigation

Change

Downturn or instability in major markets

Adverse changes in macro-economic conditions in key territories or specific automotive markets could potentially reduce or delay demand for the Company's products and services

·    Revenue spread across a range of geographic markets

·    Active safety & autonomous vehicle technology required despite automotive downturn

·    Reviewing options for entering adjacent markets

·    Constant monitoring of market trends, drivers and needs to ensure market leadership

Increased

Loss of major customers

Loss of a significant customer to competition could result in reduced revenues

·    Largest customer represents 6% of Group revenues

·    Continued product development and high levels of customer service to retain key customers

·    Long-term relationships with all key customers

No Change

Dependence on external routes to market

The Group uses several agents and resellers to address particular geographic markets:

·      Risk of reduced revenues if agreements end at short notice

·      Limited control of market pricing with resellers

·      Potential financial consequences on termination

·    Transitioning the Group to a direct sales model in key territories with offices in Germany, USA and Japan

·    The Company will maintain agents and resellers in other territories as appropriate

·    Risks relating to financial consequences are understood and all transitions managed to minimise potential quantum of termination payments

 

Increased

Acquisitions Integration & Performance

The Group has completed its first acquisitions and there is potential for acquisitions to not deliver the expected performance resulting in a potential financial impact

·    Extensive financial, commercial and legal due diligence

·    Appropriate warranties and indemnities from sellers

·    Use of earn out deal structures to ensure management retention and incentivisation

·    Recruitment of senior management to support acquisitions, including finance

·    Close management and monitoring of business performance against budget

Increased

 

Operational

 

Risk

Description

Mitigation

Change

Cybersecurity & Business Interruption

Risk of malicious cyber attack on Company IT systems or significant failure of IT infrastructure.

·    External audit completed during 2019 and recommended actions being implemented

·    Implementation of a new cloud-based CRM/ERP system during 2020

No Change

Competitor Actions

Competitors may develop new technologies and/or products which may restrict revenue growth.  Competitors may establish physical assets in key locations

·    Constant product and technology development

·    Monitoring of competitors and the IP/patents to ensure no infringement on Company intellectual property

·    Monitoring of competitor product launches and territory actions

No Change

Loss of Key Personnel

In previous years the Company had dependence on a small number of key individuals which could affect future business growth if they left the Company

·    Expansion of staff headcount and specific actions around succession planning

·    Strong staff retention rate with average length of service of > 4 years with over 2/3 of employees recruited in the last 2 years

·    Recruitment and training of new management

·    Broadening of the senior management team

Decreased

Threat of Disruptive Technology

Unforeseen new and novel technology displaces the need for Company products and services.  Simulation potentially reduces the volume of physical testing products

·    Constant horizon scanning of new technologies

·    Engagement with customers and regulators to ensure we meet their current and future requirements

·    Established simulation capability and acquired rFpro to ensure the Company can address both virtual and real-world testing

No Change

Product Liability

Risk that products supplied by the Group fail in service and result in a claim under product liability.

·    Robust product development process ensuring products are safe and fit for purpose

·    Established quality system to ensure that manufactured products meet the design standard

·    Suitably qualified and experienced engineering and technology staff

·    Product liability insurance policy in place

No Change

Failure to Manage Growth

Rapid growth places demand on the Group's management and resources. Suitable facilities are required to support the current and forecast demand of the market. Failure to ensure adequate capability and capacity could result in reduced revenues and/or growth

·    Strategic priority placed on Group's capability and capacity

·    Implementation of a five-year financial model which determines requirements for people, facilities and equipment

·    Two new facilities currently under construction

·    Implementation of appropriate IT infrastructure through comprehensive CRM/ERP system

·    Overseas offices established in USA, Germany and Japan to support customers and product installed base

Decreased

 

Financial

 

Risk

Description

Mitigation

Change

Foreign Currency

The Group operates internationally and is exposed to both transactional and translational foreign exchange risk.  The Group is particularly exposed to the Euro and US Dollar. Exposure to the  Chinese RMB and Japanese Yen is expected to grow.

The risk is enhanced by Brexit uncertainty and related currency volatility and the recently established overseas entities.

·    Group finance function monitors currency exposure forecasts

·    Majority of the Group's revenues are contracted in GBP

·    Use of foreign currency contracts to hedge where appropriate

 

Increased

Credit Risk

The Group has the potential to be exposed to bad debt risk from customers, however there is no history of material bad debt in the business

·    Risk is assessed on a case by case basis and payment terms established according to risk

·    Advance payments and letters of credit used where appropriate

No Change

 

 

Compliance

 

Risk

Description

Mitigation

Change

Intellectual Property / Patents

The Group utilises its intellectual property to deliver product and service revenue.  Intellectual property theft and/or infringement could adversely affect product sales

·    The Group has patented technology where appropriate that cover the key sales territories

·    Where products are not able to be protected through patents, design features and/or encryption is used to protect the core IP

·    Continual review of current patent and IP status and review of new products/technology conducted to ensure IP is protected

No Change

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors are responsible for preparing the Strategic Report, Directors' Report, any other surrounding information and the Group and parent company financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare group and parent company financial statements for each financial year. Under that law, they have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and applicable law and have elected to prepare the parent company financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).

 

Under Company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company and of their profit or loss for that year. In preparing each of the Group and parent company financial statements, the Directors are required to:

 

·      Select suitable accounting policies and apply them consistently;

·      Make judgments and accounting estimates that are reasonable and prudent;

·      State whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

·      Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the parent company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company's transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the parent company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

They are further responsible for ensuring that the Strategic Report and the Report of the Directors and other information included in the Annual Report and Financial Statements is prepared in accordance with applicable law in the United Kingdom.

 

The maintenance and integrity of the AB Dynamics plc web site is the responsibility of the Directors; the work carried out by the auditors does not involve the consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred in the accounts since they were initially presented on the website.

 

Legislation in the United Kingdom governing the preparation and dissemination of the accounts and the other information included in annual reports may differ from legislation in other jurisdictions.

 

This responsibility statement was approved by the Board of Directors on 26 November 2019 and is signed on its behalf by:

 

 

Dr James Routh                                               Anthony Best

Chief Executive Officer                                    Chairman

 

 

  

Consolidated statement of comprehensive income

  for the year ended 31 August 2019

 

 

 

 

2019

 

Restated*

2018

 

Note

 

£'000

 

£'000

 

 

 

 

 

 

Revenue

2

 

57,957

 

37,051

Cost of sales

 

 

(30,039)

 

(19,560)

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

27,918

 

17,491

 

 

 

 

 

 

Administrative expenses

 

 

(16,505)

 

(8,948)

 

 

 

 

 

 

Operating profit before share based payment costs

 

 

11,413

 

8,543

Share based payment costs

 

 

(586)

 

(660)

 

 

 

 

 

 

Operating profit

 

 

10,827

 

7,883

Finance income

 

 

171

 

64

 

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

 

10,998

 

7,947

 

 

 

 

 

 

Tax expense

 

 

(2,340)

 

(932)

 

 

 

 

 

 

Profit for the year

 

 

8,658

 

7,015

 

 

 

 

 

 

Other comprehensive income:

 

 

 

 

 

Items that may be reclassified to consolidated income statement:

 

 

 

 

 

Exchange gains on foreign currency net investments

 

 

178

 

-

 

 

 

 

 

 

Total comprehensive income for the year

 

 

8,836

 

7,015

 

 

 

 

 

 

Earnings per share - basic (pence)

4

 

42.9p

 

36.3p

Earnings per share - diluted (pence)

4

 

42.1p

 

35.0p

 

 

Alternative performance measures

 

 

 

 

2019

 

 

2018

 

Note

 

£'000

 

£'000

 

 

 

 

 

 

Operating profit

 

 

10,827

 

7,883

Add:  Acquisition related charges

 

 

1,551

 

-

Add:  Fee to terminate agents

 

 

550

 

-

Add:  Share based payment costs

 

 

586

 

660

 

 

 

 

 

 

Adjusted operating profit

 

 

13,514

 

8,543

 

 

 

 

 

 

Finance income

 

 

171

 

64

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted profit before tax

 

 

13,685

 

8,607

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share

4

 

56.4p

 

38.2p

Adjusted diluted earnings per share

4

 

55.4p

 

36.9p

 

 

 

 

 

 

* The prior year comparative numbers have been restated to reclassify certain overheads from cost of sales to administrative expenses.

 

 

 

Consolidated statement of financial position

as at 31 August 2019

 

 

2019

 

 

2018

 

 

Note

£'000

 

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

Goodwill

 

19,244

 

-

 

Acquired intangible assets

 

21,803

 

-

 

Other intangible assets

 

268

 

-

 

Investment

 

14

 

-

 

Property, plant and equipment

 

17,922

 

13,679

 

Deferred tax assets

 

1,952

 

1,289

 

 

 

61,203

 

14,968

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

Inventories

 

11,149

 

6,903

 

Trade and other receivables

 

12,986

 

8,470

 

Contract assets

 

1,885

 

2,189

 

Taxation

 

939

 

56

 

Cash and cash equivalents

 

36,225

 

15,942

 

 

 

63,184

 

33,560

 

 

 

 

 

 

 

TOTAL ASSETS

 

124,387

 

48,528

 

 

 

 

 

 

 

EQUITY AND LIABILITIES

 

 

 

 

 

Share capital

5

222

 

195

 

Share premium

 

60,049

 

10,258

 

Reconstruction reserve

 

(11,284)

 

(11,284)

 

Merger relief reserve

 

11,390

 

11,390

 

Translation reserve

 

178

 

-

 

Retained profits

 

38,252

 

27,484

 

TOTAL EQUITY

 

98,807

 

38,043

 

 

 

 

 

 

 

NON-CURRENT LIABILITIES

 

 

 

 

 

Deferred tax liabilities

Deferred consideration

 

               5,421

3,239

 

           339

-

 

 

 

8,660

 

339

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

Trade and other payables

 

16,920

 

10,146

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

25,580

 

10,485

 

 

TOTAL EQUITY AND LIABILITIES

 

124,387

 

48,528

 

 

 

   

Consolidated statement of changes in equity

  for the year ended 31 August 2019

 

 

 

Share capital

Share premium

Reconstruction reserve

Merger relief reserve

Translation reserve

Retained profits

Total equity

 

Note

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

At 1 September 2017

 

191

8,579

(11,284)

11,390

-

19,370

28,246

Share based payments

 

-

-

-

-

-

660

660

Total comprehensive income

 

-

-

-

-

-

7,015

7,015

Tax on options

 

-

-

-

-

-

1,107

1,107

Dividends

3

-

-

-

-

-

(668)

(668)

Issue of shares, net of share issue costs

 

4

 

 

 

-

1,683

At 31 August 2018

 

195

10,258

(11,284)

11,390

-

27,484

38,043

Share based payments

 

-

-

-

-

-

586

586

Total comprehensive income

 

-

-

-

-

178

8,658

8,836

Tax on options

 

-

-

-

-

-

2,271

2,271

Dividends

3

-

-

-

-

-

(747)

(747)

Issue of shares, net of share issue costs

 

27

-

-

-

-

49,818

At 31 August 2019

 

222

(11,284)

11,390

178

38,252

98,807

 

 

The share premium account is a non-distributable reserve representing the difference between the nominal value of shares in issue and the amounts subscribed for those shares.

 

The reconstruction reserve and merger relief reserve have arisen as follows:

The acquisition by the Company of the entire issued share capital of Anthony Best Dynamics Ltd in 2013 was accounted for a Group reconstruction. Consequently, the assets and liabilities of the Group were recognised at their previous book values as if the Company had always been the parent company of the Group.

 

The share capital for the period covered by these consolidated financial statements and the comparative periods is stated at the nominal value of the shares issued pursuant to the above share arrangement. Any differences between the nominal value of these shares and previously reported nominal values of shares and applicable share premium issued by Anthony Best Dynamics Ltd were transferred to the reconstruction reserve.

 

Retained profits represent the cumulative value of the profits not distributed to shareholders but retained to finance the future capital requirements of the Group.

 

  

Consolidated cash flow statement

  for the year ended 31 August 2019

 

 

 2019

 

2018

 

 

£'000

 

£'000

 

 

 

 

 

Profit before tax

 

10,998

 

7,947

Depreciation and amortisation

 

1,324

 

463

Loss on sale of tangible assets

 

-

 

15

Interest income

 

(171)

 

(64)

Acquisition expenses

 

768

 

-

Share based payment

 

586

 

660

 

 

 

 

 

 

 

 

 

Operating cash flow before changes in working capital

13,505

 

9,021

 

 

 

 

 

(Increase) in inventories

 

(3,447)

 

(1,944)

(Increase) in trade and other receivables

 

(1,667)

 

(333)

Increase in trade and other payables and accruals

 

1,554

 

3,194

 

 

 

 

 

 

 

 

 

Cash flow from operating activities

 

9,945

 

9,938

 

 

 

 

 

Interest received

 

171

 

64

Income tax paid

 

(1,350)

 

(1,002)

 

 

 

 

 

 

 

 

 

Net cash flow from operating activities

 

8,766

 

9,000

 

 

 

 

Cash flow from investing activities

 

 

 

 

Acquisition of businesses (including expenses, net of cash acquired)

 

(32,792)

 

-

Purchase of property, plant and equipment

 

(4,706)

 

(3,698)

Purchase of other intangibles

 

(228)

 

-

Sale of property, plant and equipment

 

-

 

6

 

 

 

 

 

 

 

 

 

 

Cash flow used in investing activities

 

(37,726)

 

(3,692)

 

 

 

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

Dividends paid 

 

(747)

 

(668)

Proceeds from issue of share capital, net of share issue costs

 

49,818

 

1,683

 

 

 

 

 

 

 

 

 

Net cash flow generated from financing activities

 

49,071

 

1,015

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

20,111

 

6,323

Cash and cash equivalents at beginning of the financial year

 

15,942

 

9,619

Effect of exchange rates on cash and cash equivalents

 

172

 

-

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of the financial year

 

36,225

 

15,942

 

 

 

 

 

 

 

 

 

 

                 

 

1.       General information

 

AB Dynamics plc is a public company limited by shares and registered in England and Wales with company number 08393914. The Company is domiciled in the United Kingdom and the registered office and principal place of business is Middleton Drive, Bradford-on-Avon, Wiltshire, BA15 1GB. 

 

The principal activity of the Group is the design, manufacture and development of advanced testing and measurement products and services to the global automotive industry.  The Group's products and services are used primarily for the development of road vehicles, particularly in the areas of active safety and autonomous systems.

 

Basis of preparation

 

The financial information set out in this document does not constitute the Group's statutory accounts for the year ended 31 August 2019 or 31 August 2018. Statutory accounts for the year ended 31 August 2018 were approved by the Board of Directors on 13 November 2018 and delivered to the Registrar of Companies. Statutory accounts for the year ended 31 August 2019 will be delivered to the Registrar following the Company's AGM. The report of the auditors on these accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.   

 

This financial information is measured and presented in Sterling which is the currency of the primary economic environment in which the Group operates. It has been prepared under the historical cost convention, except for financial instruments that have been measured at fair value through profit or loss.

 

This financial information has been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU including related interpretations issued by the International Financial Reporting Interpretations Committee ('IFRIC'), and in accordance with the Companies Act 2006 as applicable to companies reporting under IFRS.  It has been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future. The accounting policies adopted are consistent with those of the Group's statutory accounts for the year ended 31 August 2018, as described in those financial statements. New standards or interpretations which came into effect for the current reporting period did not have a material impact on the net assets or results of the Group.

 

Standards, amendments and interpretations to published standards not yet effective

 

The Directors have considered those Standards and Interpretations, which have not been applied in the financial statements but are relevant to the Group's operations, that are in issue but not yet effective and do not consider that they will have a material impact on the future results of the Group.

 

The Directors are in the process of considering the potential changes that may occur to the financial statements under IFRS 16 'Leases'.  This will apply to the Group's accounting period beginning on 1 September 2019.  It is not expected that the application of IFRS 16 will have a material impact on the Group's results.

 

2.       Segment reporting

 

The Group derives revenue from the sale of its advanced measurement, simulation and testing products derived in assisting the global automotive industry in the laboratory and on the test track. The income streams are all derived from the utilisation of these products which, in all aspects except details of revenue, are reviewed and managed together within the Group and as such are considered to be the only segment.

 

The operating segment is based on internal reports about components of the Group, which are regularly reviewed and used by the Board of Directors being the Chief Operating Decision Maker ('CODM').

 

Analysis of revenue by country of destination:

 

 

2019

 

 

2018

 

£'000

 

£'000

United Kingdom

2,028

 

617

Rest of Europe

15,741

 

12,477

North America

9,499

 

5,094

Rest of the World

30,689

 

18,863

 

57,957

 

37,051

 

All of the Group's revenue originated in the UK.  No customer individually represents 10% or more of total revenue.

 

Assets and liabilities by segment are not reported to the Board of Directors on a monthly basis, therefore are not used as a key decision making tool and are not disclosed here. 

 

A disclosure of non-current assets by location is shown below:

 

 

2019

 

 

2018

 

£'000

 

£'000

United Kingdom

41,083

 

14,939

Rest of Europe

347

 

29

North America

19,773

 

-

 

61,203

 

14,968

 

Revenues are disaggregated as follows:

 

 

2019

 

2018

Revenue by sector

£'000

 

£'000

 

 

 

 

Track testing

49,796

 

33,304

Laboratory testing and simulation

8,161

 

3,747

 

57,957

 

 37,051

 

3.      Dividends paid

 

 

 

2019

 

 

2018

 

£'000

 

£'000

 

 

 

 

Final 2017 dividend paid of £0.02 per share

-

 

384

Interim dividend paid of £0.0147 per share

-

 

284

Final 2018 dividend paid of £0.022 per share

430

 

-

Interim dividend paid of £0.01612 per share

317

 

-

 

747

 

668

 

The Board has proposed a final dividend of 2.79p per share totalling £619,000. Together with the interim dividend of 1.61p per share this gives a total ordinary dividend of 4.40p for the year.

 

4.      Earnings per share

 

Basic earnings per share is calculated by dividing the profit attributable to equity holders by the weighted average number of ordinary shares in issue during the period.

 

      Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potentially dilutive shares. The Company has one category of potentially dilutive shares, namely share options.

 

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

 

 

2019

 

2018

 

 

 

 

Profit for the year attributable to owners of the Group (£'000)

8,658

 

7,015

 

 

 

 

Weighted average number of shares used in calculating earnings per share (000):

 

 

 

Basic

20,201

 

19,330

Diluted

20,585

 

20,024

 

 

 

 

Earnings per share (pence)

 

 

 

Basic

42.9

 

36.3

Diluted

42.1

 

35.0

 

 

 

 

 

 

 

 

Adjusted profit before tax (£'000)

13,685

 

8,607

Adjusted tax (£'000)

(2,291)

 

(1,214)

 

 

 

 

Adjusted profit after tax (£'000)

11,394

 

7,393

 

 

 

 

Adjusted earnings per share (pence)

56.4

 

38.2

Adjusted diluted earnings per share (pence)

55.4

 

36.9

 

Adjusted earnings per share is calculated as the total of adjusted profit before tax, less income tax costs, but including the tax impact of the items included in the calculation of adjusted profit.

 

5.   Share capital

 

The allotted, called up and fully paid share capital is made up of 22,219,982 ordinary shares of £0.01 each. 

 

 

Note

Number of shares

000

Share capital

£'000

Share premium

£'000

Total

 

£'000

 

 

 

 

 

 

At 1 September 2017

 

19,112

191

8,579

8,770

 

13 September 2017

(i)

82

1

323

324

19 January 2018

(ii)

194

2

766

768

15 May 2018

(iii)

25

-

99

99

23 July 2018

(iv)

124

1

491

492

 

 

 

 

 

 

At 31 August 2018

 

19,537

195

10,258

10,453

 

 

 

 

 

 

6 December 2018

(v)

143

1

564

565

7 June 2019

(vi)

2,277

23

48,195

48,218

22 July 2019

(vii)

263

3

1,032

1,035

 

 

 

 

 

 

At 31 August 2019

 

22,220

222

60,049

60,271

 

(i)       On 13 September 2017, a total of 82,053 share options were exercised of £0.01 each for £3.95.

(ii)      On 19 January 2018, a total of 193,486 share options were exercised of £0.01 each for £3.95.

(iii)     On 15 May 2018, a total of 25,127 share options were exercised of £0.01 each for £3.95.

(iv)      On 23 July 2018, a total of 123,922 share options were exercised of £0.01 each for £3.95.

(v)      On 6 December 2018, a total of 142,702 share options were exercised of £0.01 each for £3.95.

(vi)      On 7 June 2019, a total of 2,050,000 new ordinary shares were placed of £0.01 each for £22.00 and a total of 227,500 new ordinary shares of £0.01 were admitted to trading on AIM following the issue of Open Offer Shares.

(vii)     On 22 July 2019, a total of 263,246 share options were exercised of £0.01 each for £3.95.

 

6.   Acquisition of businesses

 

On 28 June 2019 the Group acquired 100% of Kangaloosh Limited (trading as "rFpro") based in Romsey, UK, for initial consideration of £18.1m, which included £0.6m of surplus cash, before acquisition expenses of £0.3m. Maximum deferred contingent consideration of £3.2m is payable based on the performance of rFpro for the twelve months ended 31 January 2021.

 

On 30 August 2019 the Group acquired 100% of Dynamic Research Incorporated ('DRI') based in California, US, for initial consideration of £17.3m (US$21.0m), before acquisition expenses of £0.4m.  Maximum deferred contingent consideration of £2.9m (US$3.5m) is payable based on the performance of DRI for the twelve months ended 31 May 2020.

 

Acquisition expenses of £768,000 are included in administrative expenses within the consolidated statement of comprehensive income.

 

Set out below is an analysis of the net book values and provisional fair values relating to these acquisitions:

 

 

 

 

 

 

rFpro

DRI

Total

 

Book value

Provisional

Fair value

Book value

Provisional Fair value

Book value

Provisional Fair value

 

£'000

£'000

£'000

£'000

£'000

£'000

Acquired intangible assets

-

14,650

-

7,432

-

22,082

Deferred tax

(9)

(2,499)

-

(2,215)

(9)

(4,714)

Other intangible assets

59

59

-

-

59

59

Investment

-

-

14

14

14

14

Property, plant and equipment

58

58

498

498

556

556

Inventories

-

-

799

799

799

799

Trade and other receivables

858

858

1,722

1,687

2,580

2,545

Trade and other payables

(1,089)

(2,197)

(868)

(868)

(1,957)

(3,065)

Net assets acquired

(123)

10,929

2,165

7,347

2,042

18,276

Goodwill

-

7,535

-

11,709

-

19,244

 

(123)

18,464

2,165

19,056

2,042

37,520

 

 

 

 

 

 

 

Cash paid

 

18,085

 

17,270

 

35,355

Cash acquired

 

(2,860)

 

(471)

 

(3,331)

Expenses of acquisition

 

335

 

433

 

768

Net cash paid, after acquisition expenses

 

15,560

 

17,232

 

32,792

 

 

 

 

 

 

 

Deferred contingent consideration payable

 

3,239

 

2,257

 

5,496

Less: expenses of acquisition

 

(335)

 

(433)

 

(768)

Total consideration

 

18,464

 

19,056

 

37,520

 

 

 

 

 

 

 

The fair values set out above are provisional and will be finalised in the next financial year.  Goodwill of £19,244,000 recognised on these acquisitions represents the amount paid for future sales growth from both new customers and new products, operating cost synergies and employee know-how.

 

From the date of acquisition to 31 August 2019, the newly acquired rFpro business contributed £694,000 to revenue and £231,000 to operating profit. The newly acquired DRI business did not contribute to revenue or operating profit as it was acquired at the reporting date. 

 

Had these acquisitions been completed at the beginning of the year Group revenue would have been £68,504,000 and operating profit would have been £13,019,000.

 

7.   Alternative Performance Measures

 

Alternative performance measures are items of income and expense which, because of the nature, size and/or infrequency of the events giving rise to them, merit separate presentation. These specific items are presented below the income statement to provide greater clarity and a better understanding of the impact of these items on the Group's financial performance. In doing so, it also facilitates greater comparison of the Group's underlying results with prior periods and assessment of trends in financial performance.

 

Acquisition related charges are £1,551,000 (2018: Nil) and comprise £279,000 (2018: Nil) of amortisation of acquisition intangible assets, £768,000 (2018: Nil) of acquisition expenses and £504,000 (2018: Nil) of other acquisition related expenses including exchange loss and transaction bonus payable. 

 

£550,000 (2018: Nil) relates to fees to terminate agents as the German distribution channel was brought in-house. £586,000 (2018: £660,000) relates to share based payment costs.

 

 


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