AB Dynamics plc

Revenue was down 16% in the first half, operating profit decreased 16% to GBP 9.1 million, operating margin was maintained at 18.6%, and EPS decreased 15% to 31.3p. The effective tax rate was flat at 20%. Order intake improved to GBP 64 million in H1, the closing order book was GBP 47 million, and management said this provides approximately 70% coverage of expected full-year revenue. Cash conversion was 102% on a rolling 12-month basis, net cash was GBP 39.3 million, interim dividend was increased by 10%, and the company invested GBP 2 million in capital projects. Looking ahead, management expects FY '26 adjusted operating profit to be in line with current expectations, with revenue weighted 55% to 60% to the second half, absent an extended geopolitical disruption.

Sarah Matthews-DeMers emphasized continuity in strategy, saying the plan is for “evolution, not revolution” and that she remains committed to the medium-term ambition set out in November 2024. She highlighted three priorities: innovation, margin expansion and M&A, while noting over 500 ideas from internal innovation workshops are being reviewed. Her tone was constructive and confident, but she acknowledged macro and geopolitical uncertainty and said delivery of the medium-term plan will not be perfectly linear.

Andrew Lewis focused on the mechanics behind the half-year results: lower revenue from delayed orders and weaker VadoTech volumes, offset by operational improvements, cost actions and mix. He said operating profit was GBP 9.1 million, margin was 18.6%, EPS was 31.3p, cash conversion was 102%, and the group ended with GBP 39.3 million of net cash. He also pointed to GBP 2 million of capital investment, a GBP 20 million revolving credit facility, and stated debt capacity of about GBP 55 million at approximately 2x EBITDA, while reiterating a capital allocation order of organic R&D and CapEx first, then M&A, then dividends.

Management said AI is being used in product software, code debugging, engineering lead times and back-office efficiencies, but with caution around protecting IP. On OEM R&D budgets, Sarah Matthews-DeMers said she is not seeing significant cuts, arguing OEMs need to keep investing because of competition from Chinese entrants and the need to keep pace in Europe and the U.S. She also confirmed the company works with domestic Chinese OEMs and sells testing products and simulators into China. In response to the long-term growth question, Andrew Lewis reiterated the medium-term target to double revenue and triple operating profit, saying the structural drivers could compound over the next decade.