Investment case

With a track record of revenue growth and strong margins, we deliver sustainable value for our stakeholders through our market leading engineered products and services. Our strong cash generation and clear capital allocation framework enables us to invest for future growth.

1. Structural and regulatory growth drivers across all our markets

• We are a leader in structural long-term growth markets, supported by favourable regulatory environments and global focus on activesafety and autonomous systems development
• Our offering spans both physical and simulated testing across ADAS, autonomous vehicle R&D and vehicle testing
• We are using our core technology portfolio to leverage adjacent markets including mining, defence, materials handling and agriculture
• We have a global presence and diverse geographic end markets, including a new Asia Pacific divisional operating hub
• The proportion of recurring revenue continues to grow as we increase our service and support offering and software sales

2. Highly resilient business solving customers' sustainability challenges

• The wider focus on road safety and reduction in accidents as well as the focus on electric vehicle and battery technology is an important long-term trend that will support continued growth
• The resilience of our business model enabled us to continue investing in the business during the COVID-19 pandemic. While there was a short-term impact on demand, structural and regulatory drivers remain intact, demonstrated by the recent improvement in order intake
• We actively focus on the wellbeing of our workforce through a strong health and safety culture and employee engagement and assistance
• Our global, diversified customer base provides resilience. With direct sales and support facilities in the UK, Germany, Japan and the USA and indirect sales channels in all other key customer territories, we are well placed to deliver support where our customers need it

3. Strong margins with clear strategy for expansion

• Differentiated products and strong, long-term relationships with customers underpin strong margins
• Continued investment in innovation to deliver differentiated products to drive strong gross margins
• Ability to increase prices enables maintenance of gross margins during inflationary periods
• Current investment in ABD Solutions impacts overheads and margins during the pre-revenue phase. Margin expansion will be delivered once this new business unit delivers positive contribution
• Investment in people, business systems and capacity will deliver future efficiencies and margin expansion

4. Highly cash generative with clear capital allocation framework

• Our strong cash generation enables us to fund ongoing investment in organic growth across our core markets and ABD Solutions, to strengthen business infrastructure for the next phase of expansion and to fund acquisitions
• Our capital allocation priorities are: investment in innovation to grow core business; investment in ABD Solutions; bolt-on acquisitions; and our progressive dividend policy