AB Dynamics (“ABD”) has delivered a strong H1 FY19 performance for the six months to February, as heralded in the early-April update. Revenue grew a stunning 69%, and reported PBT almost doubled. The group appears to be benefiting from recent investment, and is well placed to continue to prosper in a highly attractive (and growing) end market. The announcement also includes five pillars of the revised strategy – New Product Development, Capability & Capacity, International Footprint, Service and Support, and Acquisitive Growth. We increase our adjusted PBT estimates by 9% and 8% respectively for FY 2019E and FY 2020E and look forward to the group delivering against its clearly-significant potential.
H1 results show ongoing performance at a very high level – revenue growth (all organic) was at 69%, gross profit (on a new basis) stable at c.50%, and adjusted operating profit almost doubling to £6.4m. Cash generation remained solid, at £5.4m for the six months, roughly in line with H1 FY18, despite a revenue-driven working capital increase.
The H1 strength was across the board, with all major product areas and geographies contributing to growth. We detail this further overleaf. An interim dividend of 1.612p is proposed, up 10% on the prior year.
We continue to believe that ABD enjoys a highly supportive and growing market – vast amounts of development work are needed to support compliance with near-term regulations around driver assistance, and longer-term to work towards full autonomous driving (although many industry players now accept that this will be materially further away than some have been suggesting).
As mentioned above, the RNS details the group’s new strategic priorities, and we describe these further overleaf.
We make modest upgrades to our forecasts to reflect the current performance, which in our view underpins both nearand long-term growth.