Ab Dynamics (LSE:ABDP) — Investor Presentation

0:00 Good morning, and welcome to the AB Dynamics PLC Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and will be submitted at any time by the Q and A tab situated on the right hand corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to James Routh, CEO. Good morning to you, sir.

0:31 Good morning, everyone, and welcome to the AB DYNAMICS full year results presentation. As always, today, I'm joined by Sarah Matthews DeMiers, our company CFO. In terms of content today, we're going to start by providing a reminder of our strong track record over the past few years before summarizing the results and some highlights. Sarah will then give a more detailed presentation of the financial performance before I take you through a review of our primary sectors in the business review. I'll then take you through our recent strategic progress, including our ESG performance and some more details on our most recent acquisition before summarizing and providing some guidance on future outlook. So we thought it would be useful to remind everyone of our track record of growth and our strategic development in the past in recent years.

1:20 I'd like to start really with the transition of the business over the past four years. So we've delivered compound annual revenue growth of 27% and increased our annual recurring revenue from 8% to 41%. At the same time, the business has internationalized to move from a solely UK based operation to an international business where over six operations in over six countries worldwide are moving from two UK based facilities to 11 operational facilities worldwide. This growth in capability and capacity has facilitated our growth and also transitioned the workforce from 97 employees to four twenty eight, which provides significant diversification of both skills and experience to take the business forward.

2:05 We've invested in our existing employees as well as restructuring the group and hiring some strong senior leadership to ensure we've got sufficient bench strength to take us to our next level of growth. In addition to these organic achievements, we've also completed four acquisitions, two in The UK, one in Singapore and China and one in The U. S. And these acquisitions have provided a significant contribution to our growth strategy. We've also demonstrated that we have a resilient business model, particularly during times of macroeconomic uncertainty, successfully mitigating the effects of Brexit, COVID, supply chain and inflation issues to date. Our growth has and will continue to be supported by strong regulatory and structural growth drivers in the market. And as the world transitions to electrification and increased amounts of automation for both on road but also off highway applications.

2:58 In terms of resilience, our revenues are diversified across a wide range of geographic territories with sales channels in all major automotive markets as well as markets for our diversified product range being developed as part of ABD Solutions. And finally, we have a strong balance sheet with a net cash position, no debt and if required, the use of a 15,000,000 revolving credit facility through to February 2025. So now coming on to the highlights. Overall, I'm very pleased to deliver yet another very strong year strong set of results for the year, which are particularly strong considering the macroeconomic backdrop and inflationary pressures that we're seeing. Our revenues increased 23% on a reported basis to 80,300,000 delivered by another record second half of the year following a very strong H1.

3:48 The growth was due to recovery in sales of track testing products, whereas the laboratory testing and simulation revenues were broadly similar to last year, albeit against a very strong prior year comparator where revenues grew by 62%. The increased revenue dropped through to good growth in adjusted operating profit, increasing by 18% to 12,700,000, delivered by an improvement in gross margin despite the inflationary environment, offset by organic investments in the business, in particular, the investment in ABD Solutions. We continue to successfully mitigate the input the impacts of input cost increases through price increases to the market, and that's due to our strongly differentiated products and services on which we can, to a degree, control market pricing.

4:35 This all translated into a small reduction of 80 basis points in adjusted operating margin to 15.8, which, if we exclude the investment made in ABD Solutions, would have been 17.5% on an underlying basis.

4:51 In terms of EBITDA, this increased 21% to 16,400,000 a return on sales of 20.4%. And adjusted diluted EPS increased by 19% due to the increased operating profit and a slight reduction in the effective tax rate. Our net cash at year end was a strong EUR 29,200,000 delivered via very good operating cash performance and working capital management. And this strong cash position supported our post year end acquisition, which I'll detail later in the presentation. And then from an order standpoint, we delivered another very strong period of order intake with a firmly positive book to bill ratio, which provides good visibility into FY 2023. So a bit more detail now around those results. The overall revenue of 80,300,000 is split 81% track testing and 19% laboratory testing and simulation as compared to an FY 'twenty one full year result, which was split 70 six-twenty four.

5:49 This is mainly due to the strong growth seen in the track testing sector and is more representative of our user split of sales between the two sectors. In terms of geography, Asia Pacific remains our largest territory at roughly half of our revenues, with the remainder of sales broadly split equally between The UK and Europe and North America. During the year, we saw growth greater than 20% in all of our main territories. And the growth in Asia Pacific was due to solid growth in Japan, China, South Korea and Taiwan, offset by a small reduction in India. In Europe, we saw growth in all main countries, but a particularly strong performance in The UK, France and Spain, with Germany growing at a more moderate rate. The revenue split by customer continues to show sales dominated by automotive OEMs at 73% compared to 61% last year, followed by service providers. So these are operators of testing facilities and proving grounds at 35% and then the remainder, Tier one suppliers and technology companies.

6:50 And as I mentioned at the start, we continue to increase our proportion of recurring revenue, increasing to 41% from 35% last year. And as mentioned at the half year, we now expect that level to normalize until we launch new service based offerings and software related revenue streams such as the software as a service version of RFPro. So I'll now hand over to Sarah to take you through some of the financial highlights. Thanks, James. We've navigated significant macroeconomic challenges and supply chain disruption and have delivered strong revenue and profit growth against the COVID impacted prior period whilst continuing to invest in new product development, capability and capacity to support future growth. Continued improvement in customer activity with the recovery of sales to China and the full year contribution from the acquisition of Vardatec resulted in growth in revenue of 23%, albeit against a weak comparative for the first half of last year.

7:51 Organic revenue increased by 18%. The gross margin improved despite inflationary cost pressures. Price increases for new orders have been implemented to mitigate cost increases. Supply chain disruptions have been managed through accelerating procurement and flexible production scheduling. Adjusted operating profit increased by 18%, with the operational gearing impact of revenue growth offset by the investment in the existing business and in ABD Solutions, resulting in an adjusted operating margin of 15.8%, down 80 basis points as expected. Excluding the investment in ABD Solutions, the increase in revenue would have dropped through to a 30% increase in operating profit and an operating margin of 17.5%.

8:41 The effective tax rate was maintained at 18%, and this resulted in a 19% increase in diluted earnings per share. Strong operating cash generation of 20,700,000 and cash conversion of 126% leaves us with significant cash resources to enable us to continue investment in the business, part of which was used to fund the post year end acquisition of Ansible Motion.

9:12 The revenue bridge illustrates the growth across both track testing and simulation. Revenue from driving robots has increased as has demand for ADAS platforms with the trend towards multi object testing and higher speed platforms leading to increased opportunities. Vardatech acquired halfway through the prior year, added an additional $4,600,000 of revenue in the period over and above the prior year, contributing 10,200,000 in total for the full year. Together, this gave rise to a 30% increase in track testing revenue. Lab testing revenue was broadly flat with higher simulation revenue due to increased demand for our software, mainly by motorsport customers, but also for the ADAS market.

9:58 This was offset by lower revenue for our SPMM products due to the timing of delivery of the long term contracts.

10:08 Turning to operating profits. The improvement in organic sales volume and mix has been supplemented by the contribution from the acquisition of BARDA Tech, partially offset by the impact of investment in overheads, the main components of which are the return of some discretionary spending on travel and conferences, inflation, and the investment in our operational and commercial platforms. The investment in ABD Solutions, our new market facing business unit that develops solutions to automate vehicle applications, added $1,500,000 to overheads in advance of the revenue curve. Turning to the cash flow. Operating activities generated cash inflow of $17,500,000 And our focus on working capital management has delivered a reduction in working capital of $3,200,000 despite funding a £7,000,000 investment in inventory to secure our supply chain.

11:04 This has been achieved by focusing on improving commercial terms in our contracts. We invested 3,800,000 in CapEx and paid 1,100,000 in dividends and paid the final earn out on the acquisition of Vardatec of 5,100,000. After other items, including ERP costs and lease payments, this leaves us with closing net cash of £29,200,000 giving us flexibility to mitigate the uncertain economic environment and respond to potential supply issues and inflationary pressures as well as supporting our future growth opportunities, including the post year end acquisition of Ansible Motion for £16,000,000 of cash and £3,200,000 of equity. Other priorities include further investments in ABD Solutions and in new product development.

11:54 Along with our £15,000,000 RCF, this leaves us with £28,000,000 of available liquidity.

12:05 Currency provided a small headwind in the year with the movement in the stronger dollar broadly offset by the weaker euro and yen. If you remember, within August year end, the big currency fluctuations happened after our year end. At constant currency, revenue and profit were zero point seven million and zero point one million higher than reported, respectively. Around 55% of revenue is denominated in dollars, euros, and yen. Future guidance is based on spot rates of $1.15, €1.15, and 165 yen. Further movements would have the impact shown in the table. For example, if the dollar were to strengthen by a further 10%, this would add £1,500,000 to revenue and £200,000 to profit.

12:53 If all the currencies moved in the same direction and strengthened by 10%, this would add 4,000,000 to revenue and 600,000 to profit. In summary, the recovery in demand has enabled us to deliver strong organic revenue and profit growth. Our ability to mitigate inflationary pressures through price increases has enabled us to maintain our gross margin. Operating margins have improved in the existing business, offset by investments in development of ABD solutions. And our strong operating cash generation supports our robust balance sheet, which enables investment in continuing to strengthen the business through organic and inorganic development, part of which was used to fund the post year end acquisition of Ansible Motion. I'll hand back to James for the business review.

13:41 Okay. Thank you, Sarah. So I'm now going give you a bit more detail on our two primary sectors of track testing and laboratory testing and simulation. Starting with track testing. Overall, our track testing sector revenue grew by 30% to GBP 64,700,000, with the second half showing yet another record half year period. The bar chart in the center of this slide clearly shows our progression in this sector and how it was adversely affected by COVID. But since coming out of the pandemic, we've demonstrated consistent strong growth in revenues. The market drivers for ADAS testing remain very supportive in this sector, and this was demonstrated by the positive book to bill ratio for all of our product lines despite the strong record revenue growth. Driving robot sales increased by 22% to 20,600,000 following the recovery of order intake in the second half of FY 'twenty one.

14:32 And demand for ADAS platforms continued, and sales grew by 31% to $29,700,000 with strong sales in our new GST 120 and Launchpad 80 product lines, which both provide the capability to test at higher speeds, which are required under new test protocols. And during the year, both of these products were approved as test tools for Euro NCAP testing, who lead the way globally on NCAP test standards. We saw strong growth in testing services with revenues increasing by 43% to $14,400,000 mainly due to the full year effect of the acquisition of Vardatec, which was made early in H2 last year. We've been very active in our new product development program with a new vulnerable road user ADAS platform under development as well as releasing two new ADAS testing dummy products to the market after year end.

15:22 The products include a soft motorcycle target designed for use on the Launchpad 80 product as well as an articulating pedestrian target with variable gait depending on movement speed. These ADAS dummies are highly differentiated against the competition and should continue to support our growth into FY 'twenty three. Moving on to laboratory testing and simulation. In this sector, revenue was broadly similar to last year with revenue of 15.6% compared to 15.7 percent last year. We must have to remember that's compared against an FY 'twenty one where we delivered very strong revenue growth of 62% as a comparative period. The performance was driven by good growth in simulation, offset by a decline in revenues of laboratory testing equipment, predominantly our SPLM machines.

16:10 So simulation delivered 12% growth to EUR 10,400,000 even after the significant growth in the prior year period of 98%. The growth was driven by strong order book for our ABDS simulators at the start of the financial year plus significant revenue growth in our RFPro physics based simulation software. RFPro has developed several new capabilities and features during the year, and this has helped drive that growth, particularly in the motorsport sector. Revenue in laboratory testing, particularly SPMM machines, declined by 19% to 5,200,000 entirely due to the timing of long term SPMM contract builds. During the year, we were very proud to have delivered SPMM 40 to a major Japanese OEM, demonstrating the long term resilience of this product range. And the SPMM market continues to be strong and supportive, and the order book for SPMM machines supports continued progress during FY 'twenty three.

17:07 In terms of new product development, the AVDS HP product, previously referred to as the AVDS Mark II in our presentations, has been completed and is now being marketed with a good pipeline of sales opportunities. In addition, the group also acquired some novel simulator technology IP during the year, which is now being used to develop highly differentiated simulator motion platforms, and they'll be available late FY 'twenty three or FY early FY 'twenty four. Overall, the sector saw a positive book to bill ratio during the year, which provides good confidence for the current financial year. And in addition, as we mentioned a couple of times, the post year end acquisition of Ansible Motion provides an enhanced product range and incremental revenue in the simulation sector.

17:52 So moving on to our strategy update now. I'm going to start by talking a little bit about ESG. Just a brief reminder that ESG is an intrinsic part of our stated purpose as a business and that we naturally support the mission to reduce road traffic deaths and injuries while simultaneously assisting the automotive industry to successfully deploy electric vehicles. And as you can see from the statistics on this slide, improvements of road safety are vitally important with over one point three five million road deaths every year and ninety three percent of those occurring in low and middle income countries. Over half of those fatalities relate to vulnerable road users, so for example, pedestrians, cyclists, scooters, motorcyclists, which is why Eurocent and others are focusing on vulnerable road user safety as part of their rating systems for new vehicles.

18:41 AB DYNAMICS plays a key role in assisting the industry to make significant improvements to these statistics. And on top of that, we're also bringing zero emission vehicles to market quicker through simulation, ensuring their safety through dynamic and track testing, and then evaluating their real world performance through on road testing. And then finally, ABD Solutions is repurposing existing manually driven vehicles into automated solutions, preventing waste and improving safety in hazardous industries.

19:13 So in terms of our ESG progress, we have now refined our ESG strategy across six primary elements that you can see in this slide, which then map directly onto the UN sustainability goals. And we've been very active across all of those six elements, but I don't intend to go through everything on this slide, but I will highlight a few key areas. So for community partnerships, we've launched our new CSR criteria, which provide focus for our community activities. So any projects we embark on must meet at least two of those criteria, and they're aligned to things like social opportunity, things that are related to our industry, diversity inclusion. And we've launched a volunteering scheme for our staff where they can take paid leave to support those projects. In terms of our people, we've launched a group wide professional development program to support the personal development of leaders of the future.

20:01 And in recognition of the significant impact on our people of the global inflation problem, we also introduced a sizable midyear salary increase to offset effects of the cost of living crisis. We take our environmental responsibility very seriously and set a medium term plan to be carbon neutral by 2030, and we've already taken significant steps towards this goal in our UK business by using solar panels in all of our primary facilities and then sourcing energy from renewable providers for all remaining energy needs. And in addition to that, our largest business in The UK and our German subsidiary achieved ISO 14,001 environmental management accreditation during the year. The board also takes our ethics and compliance responsibilities very seriously, and we have a complete suite of policies.

20:48 But it's important that employees are made aware of those issues, so we have a comprehensive training program where we had over 71% of our global employees trained on those during the year. In terms of ESG progress, we also retain our MSCI AA rating, and we have made significant improvements to our disclosures in this year's annual report, which was published yesterday, which should see further progress. So just reminding everybody of our strategic model. We have six strategic priorities that we focus on, on the left, coupled with our wider range of addressable market to deliver sustainable growth and ultimately deliver against our purpose. We continue to invest in the core areas of the business, focusing on product development, capability improvement, both in terms of technology and talent and delivering on our service and support element, which drives recurring revenues.

21:41 And then the addition of ABD Solutions has provided an opportunity for the group to build a broader based business and diversify across a wider range of industrial sectors and has the potential to drive significant organic growth.

21:59 So in terms of progress during the year, we've made significant progress against those stated strategic priorities, and this slide just brings out some of those key elements. To start with winning products and innovation, we've been very active developing new product offerings to the market. We commenced the development of Launchpad SPIN, which is the product I alluded to earlier, which is an evolution of the existing Launchpad product family to cover lower speed, higher maneuverability applications for testing with vulnerable road users such as pedestrians, cyclists and scooters. This product will be launched during the second half of our financial year this year. We continue our development of the RF Pro software as a service program, where we're developing new capabilities for the evaluation of automated and autonomous driving, allowing customers to conduct highly complex power analysis in the cloud.

22:48 Some features of that system will be available during early FY twenty three, so sorry, calendar twenty three, should I say, with a full system implementation at the end of FY twenty three and early FY twenty four. We've expanded our product offering into ADAS testing dummies by adding these highly differentiated products to improve accuracy and quality of testing. As I mentioned earlier, they include the soft motorcycle three sixty, which you can see in the picture, with rotating wheels that vary with speed and also the articulating pedestrian dummy, which has variable gait depending on movement speed. We completed the development of the ABDS high payload simulator, which allows for larger vertical travel and much higher payloads up to 700 kilograms, making it more suitable for mainstream automotive development, particularly to meet the trend of larger vehicles with increased suspension travel such as SUVs.

23:42 And we're also developing this new novel simulator technology, which I'll explain a bit more when I talk about our simulator product family later in the presentation. For capability and capacity, we've been focusing on our organization design and leadership capability to ensure we have the right structure and skills to deliver on our ambitious growth plans. And then following the acquisition of Ansible Motion, we now have an additional 10,000 square foot manufacturing facility in The UK.

24:08 We've recently hired a group operational excellence leader, whose role is to lead the operational improvement program initially in The UK, where we're focusing on improving operational efficiency in terms of delivery performance, supply chain improvements and quality, all of which contribute to our customer experience and has the potential to reduce cost of sales and improve gross margins. Finally, we continue to implement our group wide ERP system with good progress made during the year, enhancing our operational controls and procedures as well as improving visibility of management information. We've made strong progress on our diversification plans for ABD Solutions, and I'll talk about that in the next couple of slides. And then in acquisitions, we completed the acquisition of Ansible Motion. And again, I'll explain a bit more about that later in the presentation.

24:58 So an update on ABD Solutions. So since its launch just over one year ago, we've made very good progress on our diversification plans through ABD Solutions. As a reminder, the mission of ABD Solutions is to accelerate the automation of vehicle applications in three primary sectors: mining, defense and specialist vehicles. And we do this by retrofitting existing manually driven vehicles with driving robotics and then adding sensors and complex vehicle and site management software to the system. During the period, our focus has been on building out the team from a standing start and successfully delivering the key milestones on an eighteen month R and D contract for conversion of large mining trucks in Japan. The team has successfully developed the core technology and delivered full system demonstrations on hydrostatically steered articulated mining trucks.

25:52 And we're now in negotiations with key customers in Japan on their site wide requirements. We also have strong sales potential in various specialist vehicle applications where vehicles already have a drive by wire capability. So they have a CAN bus, and you can drive it remotely. You don't need driving robots. But they require a technology stack to convert the vehicle to automated applications. So for this, we'll use our Indigo Drive branded system, which we'll show you a video shortly, which consists of an ECU, electronic control unit, control software, and that's coupled with various sensors such as LiDAR, radar, and high definition cameras. In addition, we also signed a memorandum of understanding with Amarok Minerals PLC to sort support their gold mining operations in Greenland.

26:39 This is very much a partnership where we're integrating our automated solutions into their mine design concept early, which aims to deliver a sustainable mining operation through automation and electrification. So I thought it'd be helpful so you can gain an understanding of the elements that make up the ABD solutions ecosystem. And this shows slide shows the overall system architecture. So essentially, in the sense there, it consists of an ECU, electronic control unit, connected to vehicle actuation, which can be anything from mechanically actuated robots based on existing AB dynamics technology or drive by wire solutions. The vehicle management system needs to be able to speak to the vehicles and find out where it is and what it's doing, and that's done through a range of systems including radio, v two x, which is vehicle to everything communications, satellite GPS, and that can be done either indoors or outdoors.

27:35 And indoors, I. E, underground for mining is a critical feature that you have to have to be able to have this for mining applications. The system needs to be able to detect objects and classify them to determine if they're a hazard, and we use a combination of LiDAR, radar, infrared, and HD cameras to feed information to the ECU and gets processed by our software. And then also following detailed applications discussions with customers, it's also become clear we need to be able to detect and report vehicle diagnostics. So simple things like tire pressures, oil temperatures, engine warning alerts, and etcetera. So the ECU integrates all of these elements together and then presents them through a simple to use user interface that allows planning, execution, and control of operations through our vehicle management software.

28:23 And I've now got a video that summarizes this and the recent progress we've made. So if you'd like to play the video, please. Gives you a little bit of a flavor

30:17 of some of the technology and what we've been doing in in in the last twelve months. So moving on now, I think it's very important again to remind everybody of our clear capital allocation policy, which shows our disciplined approach to investment returns and capital efficiency. Our first area is investment in organic growth of the core business through funding of R and D, new product development to drive revenue growth, but also to deliver the required capability in the business, including investments that drive operating efficiencies. The second priority area for capital investment is into ABD Solutions, as you've just seen in the video, which helps drive our organic growth through our diversification strategy. Third area, acquisitions, which accelerate our strategic progress and compound our organic growth, and our approach to acquisitions is detailed a bit more on the next slide.

31:08 And finally, we'll apply our capital to our ongoing progressive dividend policy. So in terms of our approach to acquisitions, it's to select targeted acquisitions from a relatively large and fragmented market. There are many small to medium sized businesses operating in and around our markets, and we identify them through direct contacts, existing relationships, referrals, and also the M and A broker network. Any acquisition we make should meet our criteria of contributing to one or more of our stated strategic priorities and should be value enhancing from completion. In terms of the acquisition process itself, we have central resources to identify targets, negotiate deal structures, complete due diligence, and also manage the post acquisition integration of the companies.

31:56 For acquisition criteria, we're looking for track record sustainable growth, good management, cash generative, and with strong gross margin. I think that's really important feature, which indicates that the company has a competitive market position that provides differentiated products and or services. Post acquisition, we operate a hybrid model where acquired companies operate as independent businesses and brands with local P and L ownership, coupled with the synergistic benefits of being part of a larger group. And since we started our acquisition program in 2019, we've averaged a delivery of one acquisition per year. And as a reminder, we acquired RFPro and DRI in 2019, followed by Vardatech in 2021 and now Ansible Motion just after the year end.

32:45 And at present, we have a promising pipeline of potential acquisition opportunities at various stages of the process, and we will, of course, provide updates in due course. These acquisitions are all part of our overall strategy, which is to create solutions across the vehicle development tool chain. So this slide just shows the sort of main stages of that process. So vehicles are initially developed within digital environments, and RFPro can be used to evaluate vehicle dynamics, ride, handling, ADAS, and automated driving early in the development process. The next stage is to assess that vehicle with a driver in the loop, which is where our driving simulator technologies are applied. And once the prototype and production standard vehicles have been produced, they're then tested on our SPMM machine before being evaluated on a proving ground or test track where vehicle dynamics and importantly ADAS technologies can be evaluated. And it's important to note that when we test vehicles on the SPMM machine, the data from that then feeds back into simulation to to provide vehicle dynamics data, improves the fidelity of the simulation.

33:50 And then finally, vehicles are tested out on public roads at the final stage of the process, where their true performance and characteristics can be assessed, including everything from ride, handling, noise, vibration, ADAS systems, battery and charging performance, infotainment systems, connectivity, etcetera, and that's done by Vardatec. So our our approach ensures that all these stages are covered by the AB DYNAMICS range of products and services, but also that all those stages are joined up in terms of data and information transfer. So our strategy when we're acquiring companies is making sure that we have coverage of that end to end talk chain. So as already mentioned a couple of times, we acquired Ansible Motion just after the year end. So Ansible Motion provides highly scalable full motion and static simulators to the global market and already uses our existing RFPro physics based simulation software.

34:44 It's a long standing business with strong customer relationships by focusing on automotive OEMs, Tier one suppliers, motorsport customers and also academia. The acquisition builds out our existing family of simulator products to move into larger displacement applications and also allows full yaw rotation to 360 degrees. It also provides critical mass to our simulation business, and we've now formed a new market facing business unit called AB simulation, which consists of the existing AB DYNAMICS, ABDS product line, RFPro, and Ansible Motion, all under one leadership team. We also have a very capable technical team and manufacturing facilities based in The UK following this acquisition. And Ansible had a very strong order book acquisition, which underpins our financial performance expectations in FY twenty three.

35:38 And to explain how Ansible Motion products expand our product portfolio, we put together this simple representation, which shows the range across price points on the x axis, which also broadly correlates with performance. So starting with static simulators on the left hand side, it shows the two additional products from Ansible, the ThetaCube and the Sigma. The ThetaCube is a high quality, self contained transportable simulator with high quality screens, and the Sigma features a real vehicle or replica replica cockpit and also a projection vision system. But all of those are static, no motion simulators. I'll come back to the Alpha series shortly, but in terms of high end, high frequency, low latency motion based simulators, we start with the ABDS for ABDYNAMICS, which is particularly good for high dynamic response best suited to motorsport applications.

36:30 The Delta s three is the Ansible Motion flagship product and features an exceptionally large and scalable motion envelope with that 360 degree yaw rotation. And that simulator is most is the most general purpose simulator for use across a wide range of applications, including vehicle dynamics and ADAS evaluation. And finally, there's the ABD S HP, which has high dynamic response, good vertical motion, and can carry high payloads up to 700 kilos. And that's really important because many manufacturers want to put a real vehicle cockpit on top of the simulator, and that 700 kilos allows you to do that. So whilst the price point for Delta s three and ABD S HP are similar, the applications are very different. So coming back to the Alpha series, we're currently investing into r and d around a new range of high frequency, low latency simulators at a lower price point, which compete with high end hexapod type systems.

37:29 So hexapods are a bit like you see on flight simulators with large hydraulic or electric actuators moving the platform. This fills a gap in the market and provides significant improvements over the existing hexapod products in the market at that price point. And we estimate that, that product will be launched to market either very late FY 'twenty three or early FY 'twenty four. So now just summarizing and then providing a bit of forward looking outlook. So overall, we're very pleased to have delivered another very strong set of results, delivering revenue growth of 23% and operating profit growth of 18% despite macroeconomic headwinds in terms of supply chain disruption and inflation. We've had a good recovery in track testing product sales with growth delivered across all of our product lines, and our order intake remains strong with a positive book to bill ratio providing confidence into FY 'twenty three.

38:27 As described, we continue to invest in new product development, our operational capabilities in and out people and talent, delivering a revised organization design and improving our senior leadership capability. Our technology investments at ABD Solutions are on plan with successful completion of the core technology and well received mining customer demonstrations in Japan. And we continue our program of acquisitions delivering that post year end acquisition of Ansible Motion to expand our product offering and also provide critical maps to the. Of course, right now, there are numerous macroeconomic challenges that we all know about that have the potential to affect the business during the course of FY '23. We continue to see supply chain disruptions, which are being proactively managed through active inventory control and comprehensive forward planning.

39:19 Inflation, both in terms of material cost increases and labor costs, have been successfully offset to date through market price increases, and there continues to be general political uncertainty with the ongoing Ukraine conflict and other areas of tension that we remain mindful of. In terms of our own strategic and operational priorities during FY 2023, we're focusing on the successful integration of Ansible Motion and making sure that it delivers in line with our expectations. ABD Solutions remains an important area of investment. And we as we focus the transition from a technology development phase to commercial delivery. And new product development across both our track testing business and simulation remains a key priority and we as we continue to grow our market share.

40:07 At present, we have continued strong trading momentum, providing confidence to delivering in line with expectations in FY 'twenty three, although we do remain mindful of the broader macroeconomic challenges in the wider markets. However, as we demonstrated right at the start, our resilient business model is supported by long term regulatory and structural growth drivers that underpin our ongoing growth. We have a strong balance sheet, which supports continued organic and inorganic investment, and the Board's expectations for FY 'twenty three remain unchanged. So that brings me to the end of the presentation. James, Sarah, thanks very much for your presentation. Ladies and gentlemen, please do continue questions just using the Q and A tab, which is situated on the top right hand corner of your screen. But just while the company take a few moments to review some of those questions that have been submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

41:02 James, Sarah, as you can see, we've received a number of questions throughout today's presentation. And if I could just ask you to read out those questions and give responses where it's appropriate to do so, I'll pick up from you both at the end. Thanks. So a question from Sam. Has the acquisition of Ansible Motion met with your expectations? And is it now fully embedded in the group? Yeah. I'll answer that one. So it's very early days. We acquired it at the end of September, so it's only been two months since acquisition. So far, yes, it is performing in line with our expectations, and it is in the process of being integrated into the new AB simulation business. So that will probably take the best part of six months before we're at that point. So we're only two months into that process at the moment. Question from Steve. With ADAS, what's the strategy from a revenue perspective? Is it one off sales or recurring SaaS like contracts?

41:52 If we're talking about ADAS products rather than ADAS simulation, which are two different things, ADAS products is a combination of a bit of both, really. We sell products, but the new products that are sold to the market. And following the first year of usage, there is an ongoing license revenue associated to continue to use the track testing software to control those objects. When we're talking about ADAS simulation, there are two methods you can use. You can either do it on a single instance license model with RFPro, which is the current approach. But if you're doing massively complex multi multi parameter models in the cloud, then you would use the software as a service version, which contributes those recurring revenues. And finally, question from Tamsin. The revenue bridge shows £4,600,000,000 of revenue from acquisitions.

42:44 Is this the full year contribution from Vardatech? No. That's the incremental contribution from Vardatech in the year. It was acquired halfway through last year. So that 4,600,000 is the incremental. The total revenue from the year from Vardatec was 10,200,000. That brings us to the end of the questions. Oh, excellent. Okay. Well, I'd just like to say thank you to everybody for attending today's presentation, and thank you for the questions. If there are any further ones that come through, we'll be sure to respond to those. But thank you for your time today. James, Sarah, thanks once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations?

43:30 This will only take a few minutes to complete, but some sure will be greatly valued by the company. On behalf of the management team of AB Dynamics PLC, we'd like to thank you for attending today's presentation, and good morning to you all.