AB Dynamics builds out overseas presence

The bulk of AB Dynamics’ turnover comes from track testing, which experienced a 50 per cent increase in revenue growth to £49.8m, driven by demand for the group’s driving robots and Advanced Driver Assistance Systems (ADAS) technology. Its testing work offers relatively higher margins and helped lift overall gross margins to 48.2 per cent, in spite of cost increases linked to product development, its new overseas facilities and investment in the group’s management team. 

AB Dynamics’ net cash position leapt to £36.2m from £15.9m, driven by a share placing in May that raised £48.2m. It also spent £35.4m on two acquisitions – rFpro, an engine simulation software developer, and Dynamic Research, which supplies automotive engineering testing products. Excluding the placing and acquisitions, AB Dynamics’ net cash rose by £3.3m to £19.2m. But the group’s working capital almost doubled, as its inventories increased by 61 per cent to £11.1m, up from £6.9m last year. AB Dynamics invests in simulator platforms in anticipation of future orders at its year-end, which contributed to the inventory build, while the two acquisitions also fed into the group’s inventory and receivables figures.

House broker Cantor Fitzgerald forecasts full-year 2020 pre-tax profits and earnings per share of £17.5m and 66.7p, respectively, rising to £20.3m and 76.4p in 2021.