Highlights

• AB Dynamics reported FY26 Revenue of £91.6m, a 12% fall as European carmakers deferred Capital spending.

• Adjusted operating profit dropped 18% to £18.3m, yet the adjusted Operating Margin held at 20.0%.

• The board lifted the total Dividend 10% to 10.08p per share despite lower adjusted earnings.

• One-off items of £19.2m related to the discontinued VadoTech business, which the group is exiting.

What shaped a year in which sales fell but margins barely moved? For AB Dynamics (LSE:ABDP), the answer from its results for the year to 31 August 2026, published on 10 November, lies in weaker vehicle testing equipment Demand offset by cost discipline. Revenue declined 12% to £91.6m and adjusted operating profit fell 18% to £18.3m, but the adjusted operating margin finished at 20.0%, in line with the group's medium-term target.

Results at a glance

Adjusted EBITDA came in at £22.4m, down 15%, while statutory operating profit slid 38% to £10.3m. Adjusted diluted Earnings per share fell 21% to 60.3p.

One-off items totalled £19.2m, linked to VadoTech, which is now treated as a discontinued operation. The group decided to exit that Business after customer activity proved lower than expected.

At the half-year stage in April, management linked softer revenue to a dip in order intake that followed Tariff disruption in the previous financial year.

Where the revenue went

Testing Products, the largest division, saw revenue drop 21% to £58.4m. Testing Services grew 13% to £8.5m and Simulation rose 10% to £24.7m, partly cushioning the decline.

The company's materials point to European carmakers deferring Capital Investment decisions in the short term. At constant currency, revenue was down 10%, showing that a higher pound also weighed on reported numbers.

Asia Pacific was the largest region at £36.4m, or 40% of revenue, followed by North America at £28.3m and Europe at £26.2m. Gross margin improved to 64.5% from 63.7%.

Cash, deals and dividends

Net cash ended the year at £24.5m, compared with £41.4m previously, after £15.5m spent on acquisitions and £7.1m on Capital Expenditure and product development. Adjusted Operating Cash Flow fell 51% to £13.6m, as later customer delivery timing pushed cash conversion down to 61%.

Late in the year the group (LSE:ABDP) acquired eMpulse Test Systems in Michigan, a servoelectric testing specialist expected to enhance earnings from FY2027. Despite the softer year, the total dividend rose 10% to 10.08p, including a final payment of 7.00p. The group's £17.5m revolving Credit Facility has also been extended to February 2029.

Watchpoints for FY2027

The order book stood at £31m, against £32m a year earlier, giving some visibility into the new financial year. For FY2027, the board expects adjusted operating profit broadly in line with current market expectations, which the company put at about £19.7m.

Automotive and macroeconomic headwinds remain, and currency is a sensitivity: the group estimates a 10% rise in the value of the pound would cut revenue and profit by around 5%. The closure of VadoTech is expected to conclude in the first half of FY2027.

Building from a leaner base

For those following AIM-listed AB Dynamics (LSE:ABDP), the year shows a business protecting profitability through a cyclical dip. Regulation, expanded NCAP testing and new powertrains are cited by management as longer-term demand drivers, while the next wave of margin initiatives is targeted for FY2027.