# Chairman's Statement

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/LSE_ABDP.L_2017/LSE_ABDP.L_2017.mmd` · pages 3-9_

---

Chairman's Statement

## Overview

I am pleased to report that the Group has produced another year of record revenue and adjusted profit that reflects a growing demand for our products. Since our IPO in May 2013, we have delivered compound annual growth in revenue and adjusted profit before tax of 19% and 28%.

In December 2016, the Group raised gross proceeds of  \( £6.4m \)  through a Placing and Offer for Subscription which were oversubscribed by over 3.5x and 4x. We were delighted by this response and have welcomed a number of new and significant investment houses to our Shareholder Register. The net proceeds are being employed to support, and further advance, the development and future growth of the Group.

During the year, we have continued to invest heavily in our facilities, new product development and personnel, whose skills and energy remain so important to our future success. These investments will ensure that we remain well positioned within our markets to benefit from the research and development spending of our automotive OEM customers, as they continue to develop vehicles that are better and safer to drive. Vehicle complexity is increasing rapidly and there is an established need for faster and more efficient ways to develop these new vehicles. We are seeing significant interest in our advanced Vehicle Dynamic Simulator ('aVDS') as the automotive industry moves towards virtual prototyping and the longer-term goal of fully autonomous vehicles.

## New Factory and Offices

Our new state of the art factory and offices are near to completion and most of our staff have moved in. This facility, which is located close to our original factory, provides us with an additional 3,070 m \( ^{2} \)  of much needed space that will now allow us to bring more of the team, including some assembly, design and support staff, together under one roof. The design of the building reflects more properly on the cutting-edge technology employed in our products and the use of extensive "natural north light" will provide a pleasing, forward looking environment for both our employees and customers, who regularly spend time with us on site.

The Group has continued to grow strongly since we determined the design and began construction of the new facility and we have acquired further land on an adjacent site for an additional factory to meet our expansion needs. The Board continues to review the Group's capacity requirements in light of its expectations for future demand.

## New Product Development

I am pleased to report that we have a number of innovative and exciting programmes underway. Two of these, our aVDS and LaunchPad product, are discussed in the Chief Executive's Statement on pages 4 to 6. During the year, we increased significantly the level of resourcing behind our new product development activity and we continue to improve our processes to ensure we properly position our product offering.

## Dividend

The Group has a strong balance sheet and positive underlying cashflow that supports an increased dividend. The Board is recommending a final dividend of 2.0p per ordinary share, making a total dividend of 3.331p per ordinary share, an increase of 10% on the 3.025p paid in respect of the prior year. The final dividend, subject to approval at the AGM, will be paid in December 2017 to shareholders on the register at 24 November 2017.

## Board Changes

In early August 2017, we announced that Tim Rogers had informed the Board of his decision to step down as Chief Executive Officer, after 5 years with the Group. Tim remains fully engaged as CEO and I am thankful that he has agreed to stay for the time required to ensure a smooth handover to his successor. In this regard, I am pleased to report that the recruitment process for our new CEO is well underway.

Tim's contribution to the business has been substantial since he first joined AB Dynamics in 2012. Under his leadership the Group has tripled earnings in five years and moved from a small private business of just 40 people to a mid-sized, AIM quoted Group of over 120 people. Tim has been a strong advocate for the Group, driving our commercial progress and development, whilst ensuring that we retained the respect of our customers for our traditional values and our reputation for technological excellence. I would like to thank Tim for his enormously valued contribution over the last 5 years.

<--- Page Split --->

Two new Directors were appointed to the Board in August 2017. Mat Hubbard, who has been an employee since 1999, joined the Board as Chief Operating Officer. Mat has made a major contribution to the growth of the business over many years, in particular in developing the Group's track testing products, and I am sure he will continue to help drive the development of AB Dynamics in the future. Richard Hickinbotham also joined us as a Non-Executive Director. Richard has over 30 years' experience in the City and he was formerly Head of Research at Cantor Fitzgerald Europe, prior to which he held a number of senior positions at SG Warburg, Investec and Charles Stanley. He has known our business for over six years and was with us when we floated on AIM. He joins us now at an important time for the Group as it seeks to shape its Corporate Development Program. I welcome them both to the Board and look forward to working with them.

## Employees

On behalf of the whole Board I would like to thank all our employees for their hard work during the year. The contribution of each employee is valued and appreciated and our success is due to their continued commitment and enthusiasm.

## Outlook

Since its formation in 1982, Anthony Best Dynamics has gone through many changes to establish itself as a market leader in its targeted segments within the automotive R&D market. Our customers remain very active in introducing Advanced Driver Assistance Systems and in the development of semi and fully autonomous vehicles. Our order book is at a record level and we have visibility into the third quarter of our new financial year. Alongside our enhanced facilities and the potential of our new product pipeline, the Board remains confident that, under the leadership of a new CEO, we can continue to move forward with renewed vigour and enthusiasm.

Tony Best

Non-Executive Chairman

14 November 2017