Trading Update

AB Dynamics plc ("AB Dynamics", the "Company" or the "Group"), the designer, manufacturer and supplier of advanced testing, simulation and measurement products to the global transport market, provides the following trading update for the year ending 31 August 2026 ("FY26").

Conclusion of strategic review of VadoTech

As part of our half year review, we announced that customer volumes at our Chinese Testing Services business, VadoTech (on-road testing in China on behalf of a European OEM), had not developed under the new contract as the customer had indicated and therefore the business unit was placed under strategic review.

Since the half year, customer volumes have remained weak and as a result we have reached an agreement with the customer to terminate the current contract and exit the business. We expect this to conclude during the first half of FY27.

As a result, the VadoTech business will be accounted for as a discontinued operation in FY26, with FY25 comparatives restated in accordance with accounting standards. An assessment of the likely impact on FY26 and FY25 Group reported numbers is provided below. We expect FY26 reported Group revenue to be approximately £4m lower due to the classification of VadoTech as discontinued.

FY26 Trading update

As set out in the interim results, published on 14 April 2026, the Group delivered a resilient performance in the first half, against the backdrop of increasing geopolitical uncertainty. However, the overall trading backdrop has become increasingly more challenging during the second half, as a result of reduced customer confidence and logistics headwinds arising from the Middle East conflict, as well as increased disruption to development programmes within the automotive market, particularly for European OEM customers, as evidenced by several recent potential restructuring announcements.

As a result, while the Group's sales pipeline remains healthy, with robust levels of customer enquiries, we are seeing customers lengthen their procurement decision timelines which is adversely impacting short term order conversion and revenue generation within Testing Products and Simulation. Reflecting this lower level of order intake in the last quarter, the Board now expects Group revenue for continuing operations1 for FY26 to be in the range of £90-95m.

In light of the volatile market backdrop, the Group has been actively managing operating costs and discretionary expenditure closely through the year. Consequently, the Board believes it will be able to mitigate a significant degree of the adverse operational gearing impact of the lower than expected revenue, with the Group's adjusted operating margin for FY26 expected to be at 20%, consistent with the Group's medium term plan.

The deferral in order intake timing is also likely to result in customer deliveries in FY26 being heavily weighted towards the end of the financial year. This will result in year end working capital being higher than expected, however the Group's balance sheet remains robust with net cash at 30 June 2026 of £41.7m.

Whilst increasing geopolitical disruption is impacting near term performance, the long term structural drivers of growth in the Group's key markets remain compelling, underpinned by significant regulatory and technological developments. The strength of the Group's balance sheet provides the Board with confidence to continue to invest in innovation and sales and marketing resource, to ensure the Group remains in the best possible position to deliver on this long term organic growth opportunity, as well as optionality to enhance returns through proactive capital allocation.

1Continuing operations exclude the results of the VadoTech business which will be accounted for as a discontinued operation in FY26.

Appendix 1 - Discontinued operations in FY26 - re-presentation of FY25 comparatives