# Strategic report

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-cyclical-auto-parts/LSE_ABDP.L_2020/LSE_ABDP.L_2020.mmd` · pages 37-43_

---

Strategic report
Sustainability continued

area of mental health training, with a high proportion of staff undertaking awareness training and nine UK based individuals completing a mental health first aid training course.

## COVID-19 response

Since the declaration of a global COVID-19 pandemic, the Group has held regular COVID-19 management meetings to ensure the safety and wellbeing of our workforce during a rapidly changing environment.

Risk assessments were conducted by each of the Group's subsidiaries, which have been revised regularly throughout the duration of the COVID-19 pandemic. Risk assessments have been consistently updated as local and regional governmental advice changed and through constructive feedback from our engaged workforce.

As a result of these risk assessments, the Company has made a number of changes to its working practices including the introduction of a suite of new measures and safety guidelines and most notably working from home for employees where appropriate. The proportion of staff working from home has varied during the period, but an overall average is approximately 70%. The Group assessed working from home risks and issued guidance and policies to ensure staff wellbeing.

As the Group operates manufacturing and production facilities and track based testing sites, a limited number of staff were not able to work from home and continued to visit or be based at our premises during COVID-19. Where staff remained on site, each subsidiary undertook its own revisions to risk assessments and implemented a suite of changes which, dependent on location and types of activity, included a selection of the following measures:
> Increasing distance between workstations

> Offset work schedules to reduce employee density

> Physical barriers to protect employees

> Provision of face coverings, gloves and hand sanitiser

> Restrictions to the use of shared areas such as kitchens

> One-way movement systems around buildings and facilities

> Restricted entry and exit to buildings

> Introduction of cleaning stations at entry and exit points of buildings and other locations

During the financial year, the Company was not aware of any member of staff with a confirmed case of COVID-19. The Company continues to monitor staff safety and wellbeing and regularly reviews the latest governmental advice to ensure the workplace risks are minimised to a level as low as reasonably practicable.

![](images/37_0.jpg)

<--- Page Split --->

![](images/38_0.jpg)

## Health and safety reporting

The table below provides a summary of the Group's health and safety statistics. Most injuries are minor and relate to manual handling, cuts and/or abrasions.

<table><tr><td></td><td>2020</td><td>2019</td><td>2018</td><td>2017</td></tr><tr><td>Average employees</td><td>275</td><td>181</td><td>120</td><td>84</td></tr><tr><td>Reportable incidents</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Lost time incidents</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Near misses</td><td>9</td><td>13</td><td>7</td><td>4</td></tr><tr><td>Injury rate per 100 employees</td><td>4.7</td><td>7.7</td><td>7.5</td><td>6.0</td></tr></table>

The Group is proud to maintain its record of no reportable incidents (under UK RIDDOR rules) and no lost time incidents. The overall injury rate per 100 employees has reduced since 2019.

## People potential

The Group recognises that our people are critical to our ability to deliver our strategic goals. It is the Company's objective to ensure that their workplace is safe and inclusive, welcomes diversity and offers everyone the chance to develop to their full potential. Maintaining employee motivation and teamwork is also recognised by the Board as being essential to achieving the Group's business objectives and delivering its performance goals during these unprecedented times.

## Engagement and communication

The Group values the commitment of its employees and recognises the importance of communication to maintain trust and confidence between management and personnel. Historically this has been achieved through the Executive Management Group (EMG), management briefings, internal announcements, the Group's website and the distribution of preliminary and interim announcements and press releases. However, the importance of such communications has been elevated during the COVID-19 pandemic and the various national lockdowns that resulted in many staff working remotely from home.

Throughout the periods of lockdown, which occurred in all the countries in which the Group operates, the Company made frequent updates to its employees. These updates were primarily delivered by our CEO, James Routh, and covered everything from the various government rule changes and the actions taken by the Company to ensure a continued safe working environment through to Company performance, and were well received.

The Group is also committed to listening to its employees and engaging with them on the matters that concern them most. The Group implemented two employee engagement surveys during the year. These surveys invited employees to answer questions and provide feedback on a range of issues including how staff were dealing with the challenges related to COVID-19 and how the Group could provide support. The surveys were issued to the whole Group and received positive levels of engagement (ca. 70–80% response rate).

<--- Page Split --->

The Group provided a summary of the survey responses and actioned a number of initiatives aimed at addressing the concerns raised by staff, including the rolling out of training in mental health awareness for managers, and specific training aimed at supporting home working personnel covering mental health awareness, display screen equipment and cyber security.

## Recruitment, training and education

The Group remains committed to recruiting and retaining the best and brightest talent, to maintain its market position, expertise and growth. This can be seen most notably within the Group's largest subsidiary, Anthony Best Dynamics Limited, which has increased employee headcount by over 65% over the last two years, with the majority in the technical/engineering fields. The average length of service has increased to 5.3 years from 4 years in 2019.

The Group places significant emphasis on the retention and development of talent, with a number of activities undertaken throughout the year to identify potential for the future. Through the Group HR Director, a process for talent mapping and succession planning was delivered and is now being used to develop emerging talent. Whilst classroom based training had to be curtailed due to COVID-19, the Group has moved a significant amount of training online.

The average training spend has increased and the training undertaken during this period includes: Project Management, Certified ScrumMaster ('CSM'), Performance Management, Driving Assessment, IOSH – Working Safely, Excel Intermediate Course, CILT Level 3 Certificate in Logistics and Transport, Fork Lift – Basic Training, Supplier Audit Training, BDD with Spec Flow, Overhead Crane Training, HNC Electrical and Electronic Engineering.

We continue to maintain our investment in future staff with the employment of several apprentices. 10% of operations staff within Anthony Best Dynamics Limited are currently apprentices and actively pursuing relevant course of studies.

## Gender diversity

The Group's employment policies and practices remain based on non-discrimination and equal opportunities. Whilst ability and aptitude remain the determining factors in the selection, training, career development and promotion of all employees, the Group is conscious that there remain inherent disadvantages for women in engineering. Therefore, we have chosen to become a Corporate Partner to the Women's Engineering Society ('WES'). This has allowed the Group to target job advertisements to women and it has provided a number of our female engineers with WES membership, therefore giving them access to additional training, networking events or opportunities and local networks of advice and support to assist personal career development. Unfortunately, the benefits of this association have been somewhat restricted in this financial year due to the COVID-19 pandemic. However, the Group remains committed to supporting its female engineers and shall continue its relationship with WES to facilitate improvements in the coming year.
The Board recognises the importance of gender diversity and has been working to improve its gender mix, with success at Board level, where the Company has both female Executive and Non-Executive Directors.

A significant proportion of the Group's workforce are engineers and technicians. According to Engineering UK, only 12% of UK engineers are female; therefore, the Group remains above this average for our industry with women representing 19% of our overall workforce. Within the senior management team, the proportion of female representation has consistently increased, with 20% now women, compared to zero in 2018.

Set out below is an analysis of the Group's employees by gender in October each year:

![](images/39_0.jpg)

<--- Page Split --->

## Community and corporate social responsibility

The Group is committed to good community relations as they are important to the long-term development and sustainability of its businesses. As such, in February 2020 the Group took the decision to formalise how we engage with the wider community by creating a Corporate Social Responsibility (CSR) strategy, setting clear objectives and giving new focus to its activities. All CSR activities are now required to meet at least two of the following four core criteria:

## 1. Local community

2. Participation and diversity in STEM

3. Participation in automotive

4. Commitment to Armed Forces Covenant

The Group and its subsidiaries participate and invest in their local communities, making donations towards several charitable and fundraising activities primarily in support of STEM related institutions and events with a focus on Bradford-on-Avon and Wiltshire, where the Company is headquartered.

## STEM in schools and universities

The Group is actively engaging with the workforce of tomorrow and we remain committed to supporting young people in the field of engineering and technology.

## St Lawrence School (criteria 1, 2 and 3)

The organisation continues to support young students and has developed a partnership with a local secondary school in Bradford-on-Avon.

During the year, the Group had arranged for the school to take part in two work experience weeks with Anthony Best Dynamics Limited, and to provide support for the School's careers fair in January. The careers fair was very successful with students from years 9, 10 and 11 engaging with Group personnel throughout the day. Unfortunately, the work experience weeks were cancelled due to the COVID-19 pandemic.

![](images/40_0.jpg)

"The Group is committed to supporting young people in engineering and technology"

<--- Page Split --->

## Smallpeace Trust (criteria 1, 2 and 3)

The Group has also agreed to sponsor two STEM based residential courses through a charity called Smallpeace Trust. This charity provides opportunities for corporate partners to sponsor educational and development experiences across a wide range of engineering sectors. Two students were due to be selected from St Lawrence School to attend the course with a focus on students from disadvantaged backgrounds. Sadly, the courses were postponed due to COVID-19.

## Student placements (criteria 1, 2 and 3)

This year the Group took on three students for extended work placements within its organisation, with two students working for the full year and one student on a summer placement.

Bath College Apprenticeship Fair (criteria 1, 2 and 3)
There was also a plan to take on two apprentices which also had to be cancelled due to COVID-19. Many of these applications were gained from supporting the apprenticeship fair in association with Bath College in the UK.

## University of Bath (criteria 1, 2 and 3)

In February, the Company supported and attended the University of Bath careers fair and was scheduled to attend the cancelled autumn careers fair. The Group also sponsored the University of Bath Formula Student race team as well as providing technical assistance and donating parts and equipment. The Company is continuing to work with the University of Bath to develop a PhD student network to allow current students to work on live projects for the Group. Our employees also volunteered at the Formula Student virtual event.

## Wiltshire Music Centre (criteria 1 and 2)

In FY20 the Group made donations totalling £500 to the science fair for first prize in association with Wiltshire Music Centre based in Bradford-on-Avon.

## Armed Forces

The Group is committed to supporting the Armed Forces Community, which has a significant and growing presence in and around Wiltshire where the Group is headquartered.

## Military Covenant (criteria 3 and 4) and support for reserve forces

In March 2020, the Group decided to formalise its support and commitment to helping ex-military personnel transition into meaningful civilian employment and develop professional skills and careers, by signing the Armed Forces Covenant. As part of this process the Company also rolled out new policies including a new Reserve Forces Policy, detailing the support personnel who are members of the reserve forces can expect to receive from the Company.

## British Forces resettlement services (criteria 1, 2 and 4)

The Group has several former military personnel in its employment and remains proactive in its efforts to continue this initiative. Again, activity was limited during the year as the planned National Employment & Careers Fair in Tidworth was cancelled due to COVID-19.

## Mission Motorsport (criteria 2, 3 and 4)

The Company has also chosen to donate to the charity Mission Motorsport, which aids the recovery and rehabilitation of wounded, injured or sick military services personnel through participation in motorsport. Through engineering, the charity helps to adapt the vehicle, not the sport, allowing disabled drivers to compete on a level playing field. The charity also provides dedicated career managers to participants having placed over 200 service leavers back into employment.

## Diversity in STEM

## Women's Engineering Society (criteria 2 and 3)

This year the Company has chosen to become a corporate partner to the Women's Engineering Society ('WES'). The Group planned to attend a networking event for corporate partners to discuss the challenges women face in engineering and a two-day conference for companies to meet women seeking work in engineering. Unfortunately, neither of these events took place; however, the Group remains committed to WES and we hope to recommence these activities when restrictions allow.

![](images/41_0.jpg)

<--- Page Split --->

## Governance

The Group is committed to doing business honestly and openly. We hold our leaders accountable for ensuring their businesses operate according to the strict ethical standards we expect. Our Group-wide policies regarding Anti-bribery, Modern Slavery, Conflicts of Interest, Competition and Anti-trust highlight the fundamental importance to the Board of conducting all business activities to the highest standards of honesty and integrity.

## Ethical, diverse and robust supply chains

Whilst the interactions with shareholders are wholly managed by AB Dynamics plc, our communications and relationships with customers, suppliers and advisers are managed within each subsidiary by senior management, and the Group expects a high standard of expertise and business principles to be maintained in such dealings.

## Supplier due diligence

The Group has invested into the ongoing implementation of a new ERP system, which is scheduled to go live during 2021. The system will incorporate a comprehensive approach to supplier due diligence, requiring suppliers to demonstrate financial, commercial, safety and governance capabilities as well as technical competence, health and safety proficiency and a level of security compliance. We believe this tool will significantly improve the transparency of the Group's supply chains.

Currently throughout the course of the year certain suppliers are selected for audit based on supply chain risk assessments. These audits assess each supplier's approach to human rights, data protection, modern slavery, health, safety and environmental issues. Before selection, checks are undertaken to make sure suppliers are 'fit for purpose' and able to meet our contractual requirements. If risks are identified, the Group works with suppliers to address them. AB Dynamics plc expects high standards of commercial confidentiality as the protection of information and the physical assets of our customers is an important part of what we do.

## Prompt payment

Each subsidiary is responsible for agreeing payment terms with its suppliers and contractors when it enters into binding contracts for the supply of goods and/or services. Group companies are encouraged to abide by these payment terms so long as they are satisfied that the supplier has provided the goods or services in accordance with the agreed terms and conditions.

We understand the importance of predictable payments when operating a business and encourage good practice across the Group. The Group's average payments over the past year have been made within 34.5 days.

## COVID-19 supply risk

The Group is working closely with our supply chain to determine the impact of COVID-19 on their businesses and the deeper supply chain. At this time, we have not identified material supply chain risk; however, we maintain an open channel of communication with our suppliers.

AB Dynamics has reviewed its supplier base from the perspective of security and criticality. Second source suppliers have been identified and in specific instances validated. In areas where the individual component function or performance prevents an economic second source being identified, long-term supplier contracts are in place and inventory levels set to maintain supply continuity.

## Commercial integrity/business ethics

The Group is committed to conducting business honestly, openly and with integrity as taking the correct approach supports our long-term success and sustainability. Our global reputation and brand are critical, and we are aware of the potential negative consequences due to actual or suspected unethical behaviour.

Over the course of the last year, we have developed or revised a series of Group policies to guide our actions and those of our employees, suppliers and partners to ensure good governance and ethical behaviour across our Group. These include policies covering: Anti-bribery, Competition Law and Anti-trust, and Conflicts of Interest. An outline of our controls can be found on page 53 of the Statement of Corporate Governance.

## Human rights

As an international business, we recognise our responsibility for upholding and protecting the human rights of our employees and other individuals with whom we interact. The Group's subsidiaries are based within the major advanced economies of the UK, USA, Germany and Japan, which have strong legislation governing human rights. The Group complies with applicable legislation in these areas, and the other countries in which it operates, to ensure the rights of every person (whether employees, suppliers or clients) are respected.

Our employment policies and practices both support and promote diversity and equal opportunities to ensure all employees are treated with dignity and respect, and all staff are provided with a safe, secure and healthy environment in which to work, regardless of where in the world they are located.

<--- Page Split --->

## Modern slavery

The Group is committed to acting ethically and with integrity in all our business dealings and relationships, and implementing and enforcing effective systems and controls to ensure modern slavery in all its forms (including human trafficking, forced labour and child labour) is not taking place anywhere in our Group businesses or in any of our supply chains.

Whilst we continue to believe that our exposure to the risks of human rights abuses and modern slavery is low within our business and supply chain, we know it is important to remain alert and vigilant to modern slavery. Therefore, we have secured modern slavery training as part of a series of e-learning modules for procurement and supply chain employees, management and other relevant personnel scheduled to be implemented in the new financial year.

## Insider trading/employee share dealing

The Group has a strict Share Dealing Policy which is circulated to all individuals who qualify for share options. The policy covers insider trading/inside information, the AIM Rules and the Market Abuse Regulation which apply to the Company and the individuals. Employees are asked to sign to demonstrate their acceptance of these terms. Furthermore, in accordance with the Market Abuse Regulation of the Financial Conduct Authority, employees are required to seek the approval of the Chief Executive Officer or Group Company Secretary before dealing in its shares.

## Anti-bribery and corruption

The Group is committed to conducting business with honesty and integrity. The Group's policy on anti-bribery and corruption fully addresses the Bribery Act 2010 and has been issued to all members of staff. E-learning has also been used to raise awareness of the required standards of behaviour.

## Sanctions

In addition to its management of anti-bribery/ corruption, the Company also continues to monitor and review compliance across the Group's businesses in connection with international sanctions.

![](images/43_0.jpg)

"The Group is committed to acting ethically and with integrity in all our business dealings and relationships"