AB Dynamics' revenues bumped up by acquisition

The purchase of Ansible Motion is the driving force behind AB Dynamics’ (ABDP) momentum.

Ansible offers advanced driving simulator testing for car makers developing new vehicles. The business, which was bought in September for £18.1mn up front (with a further £12mn due if it hits target by the August year-end), provided 80 per cent of the growth experienced by the company’s laboratory testing and simulation arm, whose sales doubled to £14.7mn. The other 20 per cent came from AB Dynamics’ simulation software arm and the delivery of SPMM systems that put cars’ steering and suspension systems through their paces.

Meanwhile, the track testing arm that still generates around 70 per cent of group revenue grew by 13 per cent year-on-year and continues to benefit from regulatory tailwinds. A new Euro NCAP (new car assessment programme) road map until 2030 “shows an increasing complexity and increased quantity of testing” requirements over the next few years, chief executive James Routh said.  

Decent levels of cash generation also meant that AB Dynamics finished the period with net cash of £21.3mn, down from £29.2mn six months ago, even after the acquisition and the continued funding of ABD Solutions's development. It makes driving robots for off-road vehicles in defence and mining, and is expected to break even next year.

AB Dynamics shares trade at a premium. A 2 per cent gain in early trading took the share price to 36-times broker Shore Capital’s forecast earnings of 47.8p a share. Growth prospects remain strong, though, and on next year’s earnings forecast the PE ratio falls to 31.5-times, which is below its five-year average. Maintain buy.

Last IC view: Buy, 1,580p, 23 Nov 2022