Company Announcements

Final Results

Source: RNS
RNS Number : 2891Y
SDI Group PLC
30 July 2024
 

SDI Group plc

("SDI", "SDI Group", the "Company", or the "Group")

 

Final Results

 

30th July 2024, SDI Group plc, the AIM quoted Group focused on the design and manufacture of products for use in the lab equipment, industrial & scientific sensors and the industrial & scientific products markets, announces its final audited results for the year ended 30 April 2024, in line with market expectations.

 

Strategic and Operational Highlights

·      Refreshed management team in place with refined strategy to deliver sustainable growth

·      Further investments in commercial and operational capabilities

·      Strategic review completed, leading to a re-segmentation of the portfolio under three areas: Lab Equipment, Industrial & Scientific Sensors and Industrial & Scientific Products - enabling further synergies for complementary businesses

·      Acquisition of Peak Sensors ("Peak"), continuing track record of earnings enhancing acquisitions

·      Group track record of five-year CAGR revenue and adjusted operating profit* growth of 28% and 20.1% respectively

 

Financial summary

·      Revenues of £65.8m (FY23: £67.6m). Constant currency organic revenue decline of 0.5% when £8.5m of FY23 Covid-19 revenues are excluded. 10.7% revenue growth from acquisitions

·      Full year revenue performance year on year reflects a contraction at Atik, an improvement at SVS, and broadly flat in the other businesses, together with a full year contribution from LTE and FAST, and Peak which was acquired in the year

·      Adjusted operating profit* of £9.6m (FY23: £12.8m), with reported operating profit of £7.3m (FY23: £6.8m). FY23 sales mix included £8.5m of high margin Covid-19 revenues

·      Adjusted profit before tax* of £8.0m (FY23: £11.8m), with reported profit before tax of £5.7m (FY23: £5.8m)

·      Adjusted Diluted EPS* of 5.78p (FY23: 9.02p)

·      Cash generated by operations of £9.4m (FY23: £10.9m)

·      Net debt (debt less cash, excluding leases) of £13.2m (FY23: £13.3m), despite £3.4m of acquisition related spend

 

Post period-end highlights

·      Additional internal resource added post-period end to support both organic and inorganic growth

·      At 30 June 2024, continued cash generation has increased the facility headroom to £11.5m (unaudited) + £5m accordion, providing capacity to finance further acquisitions

 

Outlook

·      Management actions in H2 FY24, and in FY25 to date, taking positive effect

·      Improved staff incentivisation (below Board), and a conservative view on certain sales opportunities, results in a reduction to FY25 guidance**

·      Following conclusion of strategic review, the Group is now well placed for the future and expects longer-term organic growth to be in the range of 5-8%

·      Acquisition pipeline providing potential for one or more acquisitions in FY25

 

 

Stephen Brown, Chief Executive Officer of SDI, said:

"I am pleased to report these results, delivered despite a challenging macroeconomic backdrop. Our refined strategy to drive organic growth across our portfolio businesses, alongside our proven track record of delivering value-enhancing acquisitions, will strengthen the SDI proposition. With our refreshed management team in place, our strategic review complete and our focus on three distinct and complementary global end-markets, we are well placed to deliver sustainable growth from a stable base and create value for our stakeholders."

 

A copy of the shareholder presentation regarding the financial results for the year ended 30 April 2024 will be made available on the Company's website www.sdigroup.com/investors/reports-presentations/ later today.

 

*before share based payments, acquisition costs, reorganisation costs, divestment of subsidiary undertaking, impairment of intangibles (FY23 only) and amortisation of acquired intangible assets.

 

**Analysts from our Broker, Cavendish Capital Markets Limited, and from Progressive Equity Research regularly provide research on the Company, accessible from our website, and the Group considers the average of their forecasts to represent market expectations. Prior to this announcement, FY25 expectations were Revenue of £69.7m, Adjusted Operating Profit of £11.5m and Adjusted Profit Before Tax of £10.2m.

 

 

Enquiries

 

 

 

SDI Group plc

Stephen Brown, Chief Executive Officer

Amitabh Sharma, Chief Financial Officer

+44 (0)1223 727144

www.sdigroup.com

 

 

Cavendish Capital Markets Ltd (NOMAD & broker)

Ed Frisby/Seamus Fricker - Corporate Finance

Andrew Burdis/Sunila de Silva - ECM 

 

 

+44 (0)20 7220 0500

 

Vigo Consulting (Financial Communications)

Tim McCall / Rozi Morris / Fiona Hetherington

 

+44 (0)20 7390 0230

SDIGroup@vigoconsulting.com




 

About SDI Group plc:

 

SDl Group plc ('SDI'), specialises in the acquisition and development of companies that design and manufacture products for use in the lab equipment, industrial & scientific sensors and the industrial & scientific products markets. SDI's current portfolio of 14 companies target markets including life sciences, healthcare, astronomy, plastics and packaging, manufacturing, precision optics, measurement instrumentation and art conservation.

SDI's growth strategy is twofold: 1) through the enhancement of its portfolio companies (organic growth) and, 2) through the identification and acquisition of complementary, niche technology businesses with established reputations in global markets (inorganic growth).

For more information, please see: www.SDIGroup.com

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU No. 596/2014) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

Audited Report and Financial Statements

 

The results have been extracted from the audited financial statements of the Group for the year ended 30 April 2024.  The results do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.  Whilst the financial information included in this announcement has been prepared in accordance with UK adopted international accounting standards and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Group will publish full financial statements that comply with IFRS.  The audited financial statements incorporate an unqualified audit report. The Auditor's report on these accounts did not draw attention to any matters by way of emphasis and did not contain statements under S498(2) or (3) Companies Act 2006.

 

Statutory accounts for the year ended 30 April 2023, which incorporated an unqualified auditor's report, have been filed with the Registrar of Companies.  The Auditor's report on these accounts did not draw attention to any matters by way of emphasis and did not contain statements under S498(2) or (3) Companies Act 2006.

 

The Group's Annual Report for the year ended 30 April 2024 will, on 27 August 2024, be available to view on the Company's website: www.sdigroup.com/investors/reports-presentations/, and be sent to shareholders together with a notice of AGM which will also be available on the Company's website. 

 

Notice of AGM

 

The Company's Annual General Meeting will be held at the offices of Cavendish Capital Markets Ltd, One Bartholomew Close, London, EC1A 7BL on Thursday 26 September 2024 at 11.30am.



Chairman's Statement for the year ended 30 April 2024

 

Summary

A track record of delivery

 

I am pleased to report our robust performance during the year, especially with the headwinds faced by the business as trading normalised following COVID-19. We have met the expectations for adjusted operating profit and turnover that were set in December 2023 and have delivered free cash flow and reduced debt.

 

We welcomed Stephen Brown, formerly Chief Operating Officer ('COO') of AB Dynamics, as SDI's COO in September 2023 and he became our CEO in January 2024. Stephen's skillset, experience and track record are invaluable in the delivery of our strategy for growth, driving synergies through our portfolio companies, and the continuation of our track record in M&A. We reported previously that Stephen had made an excellent start within the Group, and I am pleased that this continues to be the case.

 

In our previous financial year, we reported an impairment of £3.5m principally for Monmouth Scientific. Through the efforts of the Group and Monmouth's management team, that business has increased its profitability and its prospects have greatly improved.

 

SDI's successful buy and build strategy continued with the earnings-enhancing purchase of Peak Sensors during the year. We continue to identify new opportunities that fit our investment criteria, and there are several opportunities being actively considered. The Group's policy is to acquire small to medium-sized companies within the science and technology sectors with a manufacturing bias. We seek to acquire businesses with high-quality, niche technologies and strong existing management teams that have sustainable profits and cashflows, and the potential to grow.

 

Future acquisitions will be funded by earnings and cashflows from our existing businesses where possible. To ensure we maintain the right level of operating capital and funding available for acquisitions, the Board has again decided not to pay a dividend this financial year but will keep this under review. During the year, as part of our cash management processes our 70% owned Chinese subsidiary, Shanghai Fraser Static Technology Co., Ltd paid a £41k dividend to its non-controlling interest as well as a dividend to its parent company, Fraser Anti-Static Techniques Limited.

 

Market opportunity

 

SDI is a good example of UK engineering success, bringing together highly specialised and innovative businesses and helping them to grow, whilst offering investors exposure to a wide range of technologies and end markets. We are seeing good demand for our portfolio companies' offerings in the market and also a solid pipeline of interesting businesses as potential acquisitions. Whilst we will consider overseas acquisitions where they are value-enhancing, the UK remains a fertile hunting-ground for us and the quality of UK innovation continues to be strong.

 

Board

 

We now have the Board in place to support SDI's growth plans. The three non-executive directors David Tilston, Andrew Hosty, and Louise Early, all have experience with global companies, which are much larger by turnover and market capitalisation. Ami Sharma, CFO, has been with the Company since August 2022 and Stephen Brown has been CEO since January 2024.

 

The Board, in common with our wider team and other stakeholders, is determined that the Group plays its part in addressing climate change, and that we indeed reap the benefits of being part of the solution. We wish to avoid, however, both pointless box-ticking where possible and exaggerated claims. We continue to evaluate our environmental, social and governance ('ESG') position. This is outlined further in the ESG section of the annual report.

 

Team

 

We now have over 500 employees across the Group and, on behalf of the Board, I would like to offer our appreciation and thanks to our colleagues across all of our portfolio companies. Their dedication, skills, experience and efforts throughout the year are key to the long-term success of our businesses.


Outlook

 

Over the last ten years, we have grown turnover from £7.0m to £65.8m, adjusted operating profit from £57k to £9.6m and the share price has increased from around 14p to 66p (as at 25th July 2024). Our ability to identify and buy companies at a reasonable price and support their continued organic growth has driven this performance. The Board is unwavering in its strategy of continuing to generate cash, seek further acquisitions and enhance their performance and we feel we have the right management team in place to continue to deliver for our shareholders.

 

There are many macro-economic concerns facing the manufacturing industry, but our broad spread of niche companies, and the structural tailwinds in a number of our businesses, along with actions driven by the recently completed strategic review gives us grounds to look forward to the future of SDI with confidence.

 

 

 

 

 

Ken Ford

Chairman

Date: 30th July 2024

Chief Executive Officer's Report for the year ended 30 April 2024

A strategy for sustainable growth

 

Overview

 

I am pleased to report the Group delivered these results despite facing headwinds in H1, including the unwinding of COVID-19 related orders, destocking by key customers and a high cost of debt. This performance is attributable to a strong second half of the year, fuelled by recent investments in our commercial and operational capabilities.

 

Encouragingly, our actions, coupled with positive market dynamics in most segments supported respectable profitability. Notably, several portfolio businesses achieved excellent levels of revenue and profitability, while some others exceeded expectations by year end. The Group remains committed to delivering and developing products that meet the evolving needs of our target markets. We have effectively implemented price adjustments to reflect supply chain cost increases, and many Group businesses are successfully transitioning from a reactive to a proactive sales culture.

 

Financial performance

 

In 2024, the Group delivered revenues of £65.8m (FY23: £67.5m), reflecting five-year CAGR sales growth of 28%. The mid-year acquisition of Peak Sensors contributed £1m in sales. Adjusted operating profit reached £9.6m (FY23: £12.8m), representing five-year CAGR profit growth of 20.1%. This aligns with guidance provided at the half-year mark. Gross margins, excluding labour costs, remained relatively stable at 63.1% (FY23: 63.3%), bolstered by the improved performance of higher-margin businesses like Astles and Chell. The second half of the year saw the successful implementation of planned operational and commercial initiatives, leading to enhanced sales, profitability, and cash generation. Cash generated from operations amounted to £9.4m (FY23: £10.9m). Acquisition-related expenditure totalled £3.4m (£2.4m for the acquisition of Peak Sensors, and a further £1m in relation to prior period deferred consideration), with net debt remaining relatively unchanged from the beginning of the year.

 

Operational review

 

As noted on page 9, we re-segmented our businesses as a result of our recent strategic review after the year end. Commentaries on the year-on-year movements for our old segment structure are provided in the CFO report. My commentary below focusses on the new structure.

 

Our laboratory equipment businesses (Monmouth Scientific, Safelab Systems, Synoptics, and LTE Scientific) achieved growth of 7.8% to £26.8m, demonstrating continued adoption of our niche products across various sectors. Market demand for Monmouth Scientific's modular clean rooms experienced strong growth within this segment.

 

Businesses in the industrial and scientific sensors sector (MPB Industries, Sentek, Peak Sensors, Chell Instruments, and Astles Control Systems) maintained relative consistency, achieving growth of 2.0% to £16.1m. This growth was partially driven by Peak Sensors' contribution after acquisition during the latter half of the year and bolstered by increasingly strong demand for Chell's sensors, systems and services.

 

The industrial and scientific products sector (Fraser Anti-Static Technologies ('FAST'), Atik Cameras, Applied Thermal Control, Graticules Optics, and Scientific Vacuum Systems) experienced a sales decline of 14.8% to £22.9m. This decline was primarily attributed to a sharp drop in Atik's revenue following the completion of a COVID-19 related contract for PCR cameras. Atik also faced significant destocking from a major customer in the first half of the year, though they managed a substantial recovery in the second half. FAST encountered geographical slowdowns in two key industrial markets, however, strong demand for equipment from Scientific Vacuum Systems and Applied Thermal Control partially offset these sales reductions.

 

We have made good progress in actively fostering synergies between portfolio companies operating in overlapping markets and/or offering similar products. Safelab and Monmouth have collaborated on successful joint tenders, including a notable £1.6m project. Similarly, LTE has participated in other collaborative bids. Monmouth and FAST have embarked on joint marketing initiatives to promote fume cabinets and cleanrooms with anti-static capabilities.

 

Additionally, the Group is capitalising on procurement advantages across its supply chain, launching joint digital campaigns, and organising combined sales conferences. These proactive initiatives will deliver enhanced organic growth across the Group.

 

The Group remains committed to supporting the long-term sustainability of its portfolio businesses through continued investment in research and development ('R&D') and the renewal or addition of a number of leaseholds. R&D expenditure amounted to £1.8m, with significant investments made in next-generation products at Synoptics (Synbiosis and AutoCol), FAST (X-series bars), Chell (pressure scanner products including the DAQ range expansion), and ATIK (ChemiMOS and CMOS cameras). These investments are strategically aligned with our customers' current and future needs, aiming to solidify the Group's competitive edge within the market. Additionally, lease renewals and a new leasehold unit totalled £0.75m, which will not only increase production capacity but also enhance efficiency, staff well-being, product quality, and image.

 

As a result of the continued investment in people for future growth, and a conservative view on certain sales opportunities, adjusted EBIT guidance for FY25 has been revised*. Following conclusion of the strategic review, the Group is now well placed for the future and expects longer-term organic growth to be in the range of 5-8%.

 

*Analysts from our Broker, Cavendish Capital Markets Limited, and from Progressive Equity Research regularly provide research on the Company, accessible from our website, and the Group considers the average of their forecasts to represent market expectations. Prior to this announcement, FY25 expectations were Revenue of £69.7m, Adjusted Operating Profit of £11.5m and Adjusted Profit Before Tax of £10.2m.

 

Strategy

 

In 2024, the Group implemented a new strategic framework to ensure sustainable success in a dynamic market environment. This is focused on two key areas that are closely aligned with our long-term growth objectives - growth initiatives for the portfolio businesses (organic growth) and value-enhancing acquisitions (inorganic growth).

 

Our organic growth strategy prioritises continuous product innovation, operational capability and capacity, and expansion into new geographic markets. As our customer and product base grows, we aim to increase repeat and recurring revenue streams through service, support, and upgrades and replacements.

 

The acquisition strategy leverages our management expertise, financial discipline, and stringent criteria to identify targets that accelerate overall growth and diversification. This approach strengthens our presence in existing markets and positions us for entry into strategically aligned new ones.

 

The strategy was borne out of the following Group motivators:

 

1.   Growth through Acquisitions and Internal Development (Buy and Build) - Focus on achieving both sustainable organic and inorganic growth.

 

2.   Strong Cash Flow Generation - Essential to facilitate our Buy and Build strategy.

 

3.   Strategic Acquisitions - Prioritising impactful M&A that maximise value creation for the Group, where possible, creating a "double bump" impact with synergistic benefits.

 

4.   Transparent Shareholder Engagement - We are committed to delivering on our strategy and demonstrating the value proposition to our shareholders.

 

Acquisitions and divestments

 

On 3 November 2023, the Group strategically expanded its product portfolio and market reach through a £2.4m acquisition of Peak Sensors, a leading UK manufacturer of temperature sensors. Peak Sensors specialises in a variety of standard and custom-designed thermocouples and resistance thermometers used in diverse industries such as glass, ceramics, waste-to-energy incineration, cement production, and industrial ovens. Located in Chesterfield, UK, Peak Sensors operates from a 5,300 sq. ft facility and employs 14 people. Peak Sensors fits within our acquisition criteria complementing the Group's existing sensor businesses and broadens its presence into new applied markets. Peak Sensors will be operated separately from our existing businesses and we warmly welcome our new colleagues to the SDI Group.


The Group financed the acquisition of Peak Sensors through a combination of existing cash resources and a revolving credit facility with HSBC. The acquired company generated £1m in revenue in 2024 and has enhanced earnings for the Group.

 

In line with our focus on maximising synergies in operations, revenue, profitability, and markets, we strategically divested Uniform Engineering (acquired by the Group in January 2021) in February 2024.

 

Acquisitions continue to form a key part of the long-term strategic development of the Group and we operate a continuous process to identify and execute acquisition opportunities. We are currently evaluating a number of transactions with the potential to conclude one or more in the new financial year. The longer-term pipeline is also positive and we will continue to deliver further value-enhancing acquisitions in accordance with our inorganic strategy.

Summary

 

I am pleased to report these results, delivered despite a challenging macroeconomic backdrop. Our refined strategy to drive organic growth across our portfolio businesses, alongside our proven track record of delivering value-enhancing acquisitions, will strengthen the SDI proposition. With our refreshed management team in place, our strategic review complete and our focus on three distinct and complementary global end-markets, we have in place a stable business from which we are well placed to deliver sustainable growth from a stable base and create value for our stakeholders.

 

 

 

 

Stephen Brown

Chief Executive Officer

Date: 30th July 2024

 

 

 

 

 

New segment structure

 

The current segment structure, comprising Digital Imaging and Sensors and Control, has been in place since 2019. After a strategic review in 2024, the Board considers this segment structure is no longer appropriate for future needs. The Group has therefore decided to create the following three segments with effect from the start of FY25:

 

·      Laboratory Equipment, comprising Safelab Systems, Monmouth Scientific, LTE Scientific and Synoptics;

·      Industrial & Scientific Sensors, comprising Chell Instruments, Astles Control Systems, Sentek, MPB Industries and Peak Sensors; and

·      Industrial & Scientific Products, comprising Atik Cameras, Fraser Anti-Static Techniques, Applied Thermal Controls, Graticules Optics and Scientific Vacuum Systems.

 

This new segment structure is expected to encourage synergies between Group companies and support portfolio adhesion. The Group will assign existing resources to drive these strategic benefits.

 

It is expected that the structure will advance the Group strategy by supporting businesses growth and profitability in route to market, enhanced value proposition and exploit value creation opportunities through the sharing and rebalancing of resource, joined up marketing activities and operational economies of scale.

 

Chief Financial Officer's Report for the year ended 30 April 2024

The financial resources to support investment in sustainable growth

 

Revenue and Profits

 

SDI Group revenues reduced by 2.7%, from £67.6m in FY23 to £65.8m in FY24. The two acquisitions in the prior year, Fraser Anti-Static Techniques and LTE Scientific (prior to the acquisition anniversaries), together with the new acquisition in FY24, Peak Sensors, contributed £7.3m (10.8%) in additional turnover. Uniform Engineering, which was disposed of at the end of February 2024, contributed £0.5m in revenues over the period.

 

From the outset of the COVID-19 pandemic in FY21, our Atik Cameras business received substantial orders from one customer for cameras designed into an OEM's PCR equipment. FY23 revenues included £8.5m in relation to this 'one-off' business. Excluding this, the organic revenue decline was 0.5% on a constant currency basis; 0.7% in absolute terms (£0.4m). If the COVID-19 related revenue is included in the comparatives, the organic decline was 13.2%.

 

Gross profit (on materials only) reduced to £41.6m (FY23: £42.8m) whilst gross margin broadly held at 63.1% (FY23: 63.3%). On a like-for-like basis (including prior year acquisitions from the anniversary of the acquisition), gross margins increased compared to FY23, which was pleasing. Our overheads have reduced on a like for like basis as we looked to control our cost base.

 

Adjusted operating profit reduced to £9.6m (FY23: £12.8m) being operating profit before share-based payments, acquisition costs, loss on disposal of subsidiary undertakings, reorganisation costs, the impairment charge (in FY23 only) and amortisation of acquired intangible assets, a reduction of 25%. This was caused by the loss of £5.6m in gross margin from the COVID-19 related contract (as noted above) which ended in FY23. 

 

Looking at segment performance, on a reported basis, the Digital Imaging segment was impacted by the non-recurring COVID-19 related revenues and the associated lost gross profit. Atik's largest OEM customer also destocked over the period, reducing revenues by £0.7m. Revenues therefore declined from £20.9m to £11m in FY24 and adjusted operating profit reduced from £6.9m to £2m.

 

The Sensors and Control segment grew 17.6% from £46.7m to £54.9m. Organic growth was 2%, and the remaining 15.6% growth was from the FY23 acquisitions and the disposal in FY24. Adjusted operating profit grew 17.5% to £9.4m.

 

There are eleven companies in the Sensors and Control segment and several have made good contributions to the Group this year. Scientific Vacuum Systems ('SVS') is a lumpy revenue business: this year it had a strong sales performance (compared to last year) as it delivered a large project in October and started two others in the second half of the year. Chell Instruments performed well with strong DAQ sales. Safelab Systems delivered several school projects. Monmouth Scientific had a strong second half as it delivered a number of clean rooms. Astles Control Systems and Sentek also delivered revenues and profits which were higher than expected.

 

Reported operating profit increased to £7.3m (FY23: £6.8m), with the comparatives including a gross impairment charge of £3.5m against the Monmouth and Uniform CGU (see note 11).

 

Revised segmentation

 

As noted on page 9, we re-segmented our businesses after the year end as follows:

 

·      Laboratory Equipment, comprising Safelab Systems, Monmouth Scientific, LTE Scientific and Synoptics;

·      Industrial & Scientific Sensors, comprising Chell Instruments, Astles Control Systems, Sentek, MPB Industries and Peak Sensors; and

·      Industrial & Scientific Products, comprising Atik Cameras, Fraser Anti-Static Techniques, Applied Thermal Controls, Graticules Optics and Scientific Vacuum Systems.

 

 

If this segmentation structure had been in place in FY24, the results of the segments would have been as follows:


 

 

 

2024
Total
£'000

2023
Total
£'000

Revenues

 

 

 

Laboratory Equipment

26,835

24,898

Industrial & Scientific Sensors

16,145

15,835

Industrial & Scientific Products

22,866

26,844

Group

65,846

67,577


 

 

Adjusted Operating Profit

 

 

Laboratory Equipment

3,237

2,359

Industrial & Scientific Sensors

4,319

4,367

Industrial & Scientific Products

       3,853

       8,192

Central costs

(1,832)

(2,109)

Group

9,577

12,809

 

Re-organisation costs

 

During the period, the Group incurred £0.3m in one-off costs relating to the departure of SDI's previous CEO. This has been included as a non-recurring item.

 

Divestment of subsidiary undertaking

 

On 29th February 2024, SDI divested Uniform Engineering for a nominal sum. This divestment resulted in a loss of £0.2m, which has been classified as a non-recurring item. Uniform recorded a small loss over the ten months to February 2024. 

 

Intangible Assets (excluding R&D)

 

Intangible assets increased by a net £0.7m from £41.3m to £42.0m at the end of FY24. Gross intangible assets (excluding R&D) grew by £1.8m as a result of the Peak Sensors acquisition. £1.6m of amortisation was charged in the period (FY23: £1.8m) against customer relationships, trade names and other intangible assets. The £1.8m in increased intangible cost was split as follows: £1.1m goodwill and £0.7m customer relationships.

 

Investment in R&D

 

Under IFRS we are required to capitalise certain development expenditure, and in the year ended 30 April 2024, £0.8m (FY23: £0.3m) of cost was capitalised. Much of the work of our R&D teams does not qualify for capitalisation and is charged directly to expense. Amortisation for 2024 was £0.4m (FY23: £0.5m). The carrying value of the capitalised development at 30 April 2024 was £1.2m (FY23: £0.7m) to be amortised over 3 years.

 

Interest Payable

 

Interest charges for the year increased to £1.6m (FY23: £1.0m). This increase was due to the higher levels of debt through the year as well as rising interest rates.

 

Taxation

 

The taxation charge for the year was £1.4m (FY23: £1.9m) representing an effective tax rate of 24.9% compared to 33.2% in FY23. The effective tax rate for FY23 include one-off factors, specifically the impairment of intangibles not being deductible for tax purposes. The Group continues to benefit from R&D tax credits.

 

Restatement

 

In previous years, deferred tax assets and liabilities have been grossed up on balance sheet. These balances have now been netted down by jurisdiction and the comparative numbers have been restated as a result. This has no impact on reported profits or net assets and is a presentational change only. The impact on total assets and total liabilities is shown in note 13.

 

We have reviewed the disclosure for the consolidated income statement and statement of comprehensive income. We consider the IAS1 presentation of expenses by nature better reflects SDI's business and hence have adjusted the format accordingly. We have also restated the prior year's results. This is a presentational adjustment only and does not impact on reported profit before tax.

 

Earnings per Share

 

Adjusted diluted EPS, an alternative performance measure which excludes certain non-cash and non-recurring expenses was 5.78p (FY23: 9.02p), a reduction of 35.9%. The diluted earnings per share for the Group increased to 4.04p (FY23: 3.72p).

 

Cash Flow and Working Capital

 

Cash generated from operations reduced to £9.4m (FY23: £10.9m). This was due to a £2.7m reduction in customer advances and a further £2.5m reduction in other payables offset by a £3.3m reduction in inventories. In total, working capital increased by £2.0m. The £2.7m reduction in customer advances was due to SVS shipping a large piece of equipment during the year (£1.4m). Astles Control Systems saw its customer advances reduce by £0.7m as it delivered chemical dosing equipment and LTE reduced by £0.5m as it worked on an environmental test chambers project for a major OEM.

 

Taxes paid have increased to £1.9m (FY23: £2.2m). This included £0.2m of FY23 tax relating to acquisitions.

 

Our investment in fixed assets (excluding for acquisitions) remained similar at £1.2m (FY23: £1.1m).

 

Acquisition of new businesses remains our largest cash outlay, with £2.4m deployed on a cash-free basis (FY23: £18.7m). A further £1.0m was paid in relation to prior period deferred consideration related to SVS. There was no deferred consideration outstanding at the end of FY24.

 

Funding

 

The Group acquired one business over the period, funded through additional debt.

 

Net debt (excluding lease liabilities), or bank debt less cash, was £13.2m at the end of the year, similar to that at the beginning of the period (£13.3m). This represents a net debt: EBITDA ratio of 1.07x, which is well within the ceiling provided by our bank facility. On 30 November 2022, the Group reached agreement with HSBC to exercise £5m of an available £10m accordion option, which increased the committed loan facility from £20m to £25m. The balance of the accordion option (£5m) remains available to the Group (at the discretion of HSBC) for future exercise. In April 2024, HSBC approved an extension of the repayment date by one year to November 2026. At the end of the financial year the Group had drawn down £14.6m of its revolving credit facility (FY23: £16m), leaving £10.4m in headroom (excluding the additional £5m accordion option).

 

The Group has an unstretched balance sheet and has sufficient access to funds, alongside its steady cash flow, to acquire new companies and invest in our current portfolio of businesses.

 

 

 

 

Amitabh Sharma

Chief Financial Officer

Date: 30th July 2024


Strategic report - Business Model

 

SDI Group is an AIM-quoted group specialising in the acquisition and development of a portfolio of companies that design and manufacture products for use in the lab equipment, industrial & scientific sensors and industrial & scientific products markets. Corporate expansion is being pursued, both through organic growth within its portfolio companies and through the acquisition of high-quality businesses with established reputations in global markets.

 

The Board believes there are many businesses operating within the market, a number of which have not achieved critical mass, and that presents an ideal opportunity for consolidation. This strategy will be primarily focused within the UK but, where opportunities exist, acquisitions in Europe and the United States and elsewhere will also be considered, particularly if these also enable geographic expansion of our existing businesses.

 

We intend to continue to buy stand-alone businesses as well as smaller entities and technology acquisitions which bolt onto our existing ones. Our track record over recent years has been good, with seventeen businesses acquired over the three segments.

 

An important element of our strategy is that we are known to be a good acquirer, able to help sellers to achieve a sale quickly and easily, and without surprises.

 

We keep a lean headquarters and our businesses are run by seasoned local management with broad discretion within defined limits. Our aim is to grow them, profitably, and we seek to provide them with the resources necessary to grow. Acquired businesses often find that they can grow faster within the SDI Group than they were prepared to do under private ownership, and they are able to learn from and share experience with other companies in the Group.

 

Since the year end our current businesses now fall broadly into three segments, which we call Lab Equipment, Industrial & Scientific Sensors and Industrial & Scientific Products, and within these groupings there are significant commonalities of applications, industries served and technologies employed. This provides additional opportunity for knowledge sharing, which we encourage. The ability to generate synergies has increased as the Group has grown in scale and SDI has acquired businesses in closely related markets.

 

Growth in revenues and profit within our businesses depends on both technology advancement and seeking new customers, often by expanding geographical reach, and the Board sees geographical expansion as a driver of organic growth for the future.

 

By lowering the cost of capital of businesses we acquire and by facilitating their profitable growth, our business model has demonstrated that it can provide good returns to shareholders and can be scaled into the future.

 

Key Performance Indicators

 

A range of financial key performance indicators are monitored for each business and for the Group monthly against budget and over time by the Board and by management, including order pipeline, revenue, gross profit (on materials only), costs, adjusted operating profit, debtor days, months of stock and free cashflow.

 

In support of our acquisition strategy as outlined above, we monitor our acquisition pipeline, including any prospects that fail to progress. Post-acquisition, the Board discusses integration progress, and monitors financial performance against our initial plans. Over a longer period, we monitor the return on total invested capital of all of our businesses.

 

Additionally, the Board reserves specific agenda items for discussion of environment, social and governance matters, health and safety and other employee welfare-related issues.

 




Consolidated income statement and statement of comprehensive income

for the year ended 30 April 2024


Note

 

2024
£'000


*Restated

2023
£'000



 

 



Revenue

4

 

65,846


67,577

Other income

 

 

104


112

Operating costs

5

 

(58,660)


(60,877)

 

 

 

 



Operating profit

 

 

7,290


6,812


 

 

 



Net financing expenses

 

 

(1,627)


(970)


 

 

 


 

Profit before tax

 

 

5,663


5,842


 

 

 



Income tax

6

 

(1,409)


(1,939)


 

 

 



Profit for the year

 

 

4,254


3,903


 

 

 



Attributable to:

 

 

 



Equity holders of the parent company

 

 

4,231


3,871

Non-controlling interest

 

 

23


32

Profit for the year

 

 

4,254


3,903

 

Statement of Comprehensive Income

 

 

 


Profit for the year

4,254

 

3,903


 

 


Other comprehensive income

 

 


Items that will not be reclassified subsequently to profit and loss:

 

 

 

 



Remeasurement of net defined benefit liability

 

 

-


95

 

 

 



Items that will be reclassified subsequently to profit and loss:

 

 

 



Exchange differences on translating foreign operations

 

 

(38)


142


 



Total comprehensive income for the year

4,216

 

4,140





Attributable to:




Equity holders of the parent company

4,193


4,108

Non-controlling interest

23

 

32

Total comprehensive income for the year

4,216

 

4,140

 

Earnings per share

 

 

 




 

 

 



Basic earnings per share

10

 

4.09p


3.80p

Diluted earnings per share

10

 

4.04p


3.72p

 

 

 

*See note 5



Consolidated balance sheet

As at 30 April 2024

Company registration number: 06385396

Note


 

30 April 2024

*Restated

30 April 2023

*Restated

1 May 2022

 



£'000

£'000

£'000

Non-current assets


 

 



Intangible assets

11

 

42,040

41,350

36,035

Property, plant and equipment

 

 

8,219

8,219

4,074

Right-of-use leased assets

 

 

6,488

6,469

7,305

Investments in associated undertakings

 

 

-

24

-

Deferred tax asset

 

 

144

148

27


 

 

56,891

56,210

47,441

Current assets

 

 

 



Inventories

 

 

10,577

13,504

7,273

Trade and other receivables

 

 

12,677

11,980

7,544

Corporation tax asset

 

 

87

-

-

Cash and cash equivalents

 

 

1,430

2,711

5,106

 

 

 

24,771

28,195

19,923

 

 

 

 

 

 

Total assets

 

 

81,662

84,405

67,364

 

 

 

 



Non-current liabilities

 

 

 



Borrowings

9

 

(20,636)

(21,996)

(10,656)

Provisions

 

 

(245)

-

-

Deferred tax liability

 

 

(4,841)

(4,750)

(2,858)

 

 

 

(25,722)

(26,746)

(13,514)

Current liabilities

 

 

 



Trade and other payables

 

 

(9,647)

(15,444)

(16,089)

Provisions

 

 

(22)

(67)

(163)

Borrowings

9

 

(841)

(745)

(779)

Current tax payable

 

 

-

(111)

(1,027)

 

 

 

(10,510)

(16,367)

(18,058)

 

 

 

 

 

 

Total liabilities

 

 

(36,232)

(43,113)

(31,572)

 

 

 




Net assets

 

 

45,430

41,292

35,792

 

 

 

 



Equity

 

 

 



Share capital

 

 

1,046

1,041

 1,022

Merger reserve

 

 

2,606

2,606

 2,606

Merger relief reserve

 

 

424

424

 424

Share premium account

 

 

10,858

10,778

 9,905

Share based payment reserve


 

764

557

 320

Foreign exchange reserve


 

143

181

 39

Retained earnings


 

29,575

25,673

 21,476

Total equity due to shareholders


 

45,416

41,260

 35,792

 


 

 



Non-controlling interest


 

14

32

-

Total equity


 

45,430

41,292

35,792

 

 






*See note 13



Consolidated statement of cashflows

For the year ended 30 April 2024

 

 

Note

2024

2023



£'000

£'000

Operating activities




Profit before tax


4,254

3,903

Depreciation


2,021

1,941

Amortisation

11

1,963

2,315

Finance costs and income


1,627

970

Impairment of intangible assets

11

-

3,520

Decrease in provisions


(15)

(96)

Taxation in the income statement

6

1,409

1,939

Employee share-based payments


128

351

Operating cash flows before movement in working capital


11,387

14,843

Decrease/(increase) in inventories


3,343

(2,929)

(Decrease)/increase in trade and other receivables


(92)

2,689

Decrease in trade and other payables


(5,252)

(3,730)

Cash generated from operations


9,386

10,873





Interest paid


(1,627)

(970)

Income taxes paid


(1,925)

(2,161)

Cash generated from operating activities


5,834

7,742





Investing activities




Capital expenditure on fixed assets


(966)

(1,085)

Sale of property, plant and equipment


144

84

Expenditure on development and other intangibles


(820)

(323)

Payment of deferred consideration


(961)

-

Acquisition of subsidiaries, net of cash

12

(2,386)

(21,056)

Net cash used in investing activities


(4,989)

(22,380)





Financing activities




Finance leases repayments


(796)

(789)

Dividends paid to non-controlling interests in subsidiaries


(41)

-

Proceeds from bank borrowing

9

3,700

15,000

Repayment of borrowings

9

(5,100)

(3,000)

Issues of shares and proceeds from option exercise


85

892

Net cash from financing


(2,152)

12,103



 


Net changes in cash and cash equivalents


(1,307)

(2,535)

 




Cash and cash equivalents, beginning of year


2,711

5,106

Foreign currency movements on cash balances


26

140

Cash and cash equivalents, end of year


1,430

2,711

 


 

 

 

 

 

 

 

 

 

 

 

  Consolidated statement of changes in equity

As at 30 April 2024

 

 

 

 

 

 

 

 

Share capital

Merger reserve

Merger relief reserve

Foreign exchange

Share premium

      Share based payment reserve

   Retained     earnings

Total equity due to shareholders

Non-controlling interest

Total equity

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 April 2023

1,041

2,606

424

181

10,778

557

25,673

41,260

32

41,292

 

 

 

 

 

 

 

 

 

 

 

Shares issued

5

-

-

-

80

-

-

85

-

85

Tax in respect of share options

-

-

-

-

-

-

(249)

(249)

-

(249)

Share based payment transfer

-

-

-

-

-

80

(80)

-

-

-

Share based payment charge

-

-

-

-

-

127

-

127

-

127

Dividends paid

-

-

-

-

-

-

-

-

(41)

(41)

                         

 

 

 

 

 

 

 

 

 

 

Transactions with owners

5

-

-

-

80

207

(329)

(37)

(41)

(78)


 

 

 

 

 

 

 

 

 

 

Profit for the year

-

-

-

-

-

-

4,231

4,231

23

4,254

Other comprehensive income for the year:

 

 

 

 

 

 

 

 

 

 

Foreign exchange on consolidation of subsidiaries

 

-

 

-

 

-

 

(38)

 

-

 

-

 

-

 

(38)

 

-

 

(38)

Total comprehensive income for the period

-

-

-

(38)

-

-

4,231

4,193

23

4,216

 

 

 

 

 

 

 

 

 

 

 

Balance at 30 April 2024

1,046

2,606

424

143

10,858

764

29,575

45,416

14

45,430

 

 

 

 

  Consolidated statement of changes in equity

As at 30 April 2023





Share capital

Merger reserve

Merger relief reserve

Foreign exchange

Share premium

      Share based payment reserve

   Retained     earnings

Total equity due to shareholders

Non-controlling interest

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000























Balance at 30 April 2022

1,022

2,606

424

39

9,905

320

21,476

35,792

-

35,792












Shares issued

19

-

-

-

873

-

-

892

-

892

Tax in respect of share options

-

-

-

-

-

-

117

117

-

117

Share based payment transfer

-

-

-

-

-

(114)

114

-

-

-

Share based payment charge

-

-

-

-

-

351

-

351

-

351

                         











Transactions with owners

19

-

-

-

873

237

231

1,360

-

1,360












Profit for the year

-

-

-

-

-

-

3,871

3,871

32

3,903

Other comprehensive income for the year:











Actuarial gain on defined benefit pension

 

-

 

-

 

-

 

-

 

-

 

-

 

95

 

95

 

-

 

95

Foreign exchange on consolidation of subsidiaries

 

-

 

-

 

-

 

142

 

-

 

-

 

-

 

142

 

-

 

142

Total comprehensive income for the period

-

-

-

142

-

-

3,966

4,108

32

4,140












Balance at 30 April 2023

1,041

2,606

424

181

10,778

557

25,673

41,260

32

41,292

 

 


Notes to the financial information for the year ended April 2024

 

                       1.    GENERAL INFORMATION

            

SDI Group PLC is a public company incorporated in England and Wales under the Companies Act 2006. The registered office is at Beacon House, Nuffield Road, Cambridge, Cambs, CB4 1TF.

 

The summary accounts set out above do not constitute statutory accounts as defined by Section 434 of the UK Companies Act 2006. The summarised consolidated income statement and other comprehensive income summarised, the consolidated balance sheet at 30 April 2024, the summarised consolidated cash flow statement and the summarised consolidated statement of changes in equity for the year then ended have been extracted from the Group's 2024 statutory financial statements upon which the auditor's opinion is unqualified and did not contain a statement under either sections 498(2) or 498(3) of the Companies Act 2006. The audit report for the year ended 30 April 2023 did not contain statements under sections 498(2) or 498(3) of the Companies Act 2006. The statutory financial statements for the year ended 30 April 2023 have been delivered to the Registrar of Companies. The 30 April 2024 accounts were approved by the directors on 30th July 2024 but have not yet been delivered to the Registrar of Companies.

 

 

2         Significant Accounting policies

 

Basis of accounting

The summary accounts are based on the consolidated financial statements that have been prepared in accordance with UK-adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards.

 

They have been prepared under the assumption that the Group operates on a going concern basis and on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

 

Going concern

The Group ended FY24 with net debt (excluding leases) of £13.2m compared to £13.3m as at 30 April 2023 and generated free cash flow (before acquisition consideration) of £4.2m (FY23: £6.4m). Free cash flow was lower than FY23 largely due to lower profitability and a £2.7m unwind of previous customer advances received, £1.4m of which was for Scientific Vacuum Systems to build a sputtering machine for a customer. Astles Control Systems saw its customer advances reduce by £0.7m as it delivered chemical dosing equipment and LTE reduced by £0.5m as it worked on an environmental test chambers project for a major OEM. Interest paid increased by £0.7m as interest rates and debt levels were higher over the year. On 30 November 2022, the Group reached an agreement with HSBC to exercise £5m of an available £10m accordion option, which increased the committed loan facility from £20m to £25m. £14.6m was drawn down under this facility at the year end (note 9). In April 2024, HSBC approved an extension of the repayment date by one year to November 2026. This provides the Group with greater certainty over long-term liquidity.  

 

The Board has considered the potential of a downturn given the current economic environment. The Group is in a strong financial position with available facilities, sufficient headroom on all covenants associated with the revolving credit facility, good profitability, and a strong future order book, enabling it to face any reasonable likely challenge of the continued uncertain global economic environment. The Board has reviewed forecasts for the period to 30 April 2026, evaluated a severe downside scenario and performed a sensitivity analysis, all of which the Board considers extremely unlikely. In the event of a more severe scenario (without applying any mitigations), both covenants would come under some (but not severe) stress. However, mitigations would be obviously applied should this unlikely scenario present itself, such as (but not restricted to) further cost cutting, sale and leaseback of freehold property and potential disposal of assets. This would not cause any significant challenges to the Group's continued existence.

 

The Board therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and therefore continue to adopt the going concern basis in preparing the Annual Report and Accounts.

 

 

 

Changes in accounting policies

At the date of approval of these financial statements, certain new standards and amendments to and interpretations of existing standards have been published but are not yet effective.  None of these pronouncements have been adopted early by the Group, and they have not been disclosed as they are not expected to have a material impact on the Group's financial statements.  Management anticipates that all pronouncements will be adopted for the first period beginning on or after their effective date.

 

The directors have reviewed the disclosure for the Consolidated income statement and statement of comprehensive income and consider the IAS1 presentation of expenses by nature better reflects SDI's business and hence have adjusted the format accordingly. The prior year has been restated as a result. This is a presentational adjustment only and does not impact on reported profit before tax (see note 5). The effect of the change is as follows:

 


As at 30th April 2024

As at 30th April 2023


As previously stated

Restated

Difference

As previously stated

Restated

Difference


£'000

£'000

£'000

£'000

£'000

£'000








Revenue

65,846

65,846

                 -  

67,577

67,577

                 -  

Cost of sales

(24,297)

                 -  

(24,297)

(24,810)

                 -  

(24,810)

Gross Profit

41,549

                 -  

41,549

42,767

                 -  

42,767








Other income

104

104

                 -  

112

112

                 -  








Operating expenses

(34,363)

                 -  

(34,363)

(32,547)

                 -  

(32,547)

Impairment of intangible assets

                 -  

                 -  

                 -  

(3,520)

                 -  

(3,520)

Total operating expenses

(34,363)

(58,660)

24,297

(36,067)

(60,877)

24,810








Operating profit

7,290

7,290

                 -  

6,812

6,812

                 -  

 

There have been no other changes in policies during the year.

 

 

3          ALTERNATIVE PERFORMANCE MEASURES

 

The Group uses Gross Profit (on materials only), Adjusted Operating Profit, Adjusted Profit Before Tax, Adjusted Diluted EPS and Net Operating Assets as supplemental measures of the Group's profitability and investment in business-related assets, in addition to measures defined under IFRS. The Group considers these useful due to the exclusion of specific items that are considered to hinder comparison of underlying profitability and investments of the Group's segments and businesses and is aware that shareholders use these measures to evaluate performance over time. The adjusting items for the alternative measures of profit are either recurring but non-cash charges (share-based payments and amortisation of acquired intangible assets) or exceptional items (reorganisation costs and acquisition costs). Some items, e.g., impairment of intangibles are both non-cash and exceptional.

 

 

APM

Description

Gross profit (on materials only)

Gross profit excluding any labour costs

Adjusted operating profit

Reported profit excluding any recurring but non-cash charges or exceptional items

Adjusted profit before tax

Adjusted diluted EPS

Total net income divided by the weighted average number of shares outstanding and dilutive shares

Net operating assets

The total of all assets directly linked to the main operations minus all operational liabilities

 

The following table is included to define the term Gross Profit (on materials only):

 

 

 

2024

£'000

*Restated

2023

£'000

 

 

 

Revenue

65,846

67,577

Cost of purchases

(24,297)

(24,810)

Gross Profit (on materials only)

41,549

42,767

Gross Margin (on materials only)

63.1%

63.3%

 

 

The following table is included to define the term Adjusted Operating Profit:

 

 

2024

£'000

2023

£'000

 

 

 

Operating Profit (as reported)

7,290

6,812


 

 

Adjusting items (all costs):

 

 

Non-underlying items

 

 

Share based payments

128

351

Amortisation of acquired intangible assets

1,558

1,795

Exceptional items

 

 

Reorganisation costs

447

-

Impairment of intangible assets

-

3,520

Acquisition costs

155

331

Total adjusting items

2,288

5,997


 

 

Adjusted Operating Profit

9,578

12,809

 

 

Adjusted Profit Before Tax is defined as follows:

 

 

2024

£'000

2023

£'000

 

 

 

Profit before tax (as reported)

5,663

5,842


 

 

Adjusting items (all costs):

 

 

Non-underlying items

 

 

Share based payments

128

351

Amortisation of acquired intangible assets

1,558

1,795

Exceptional items

 

 

Reorganisation costs

447

-

Impairment of intangible assets

-

3,520

Acquisition costs

155

331

Total adjusting items

2,288

5,997


 

 

Adjusted Profit Before Tax

7,951

11,839

 

*See note 5

 

Adjusted EPS is defined as follows:

 

 

2024

          £'000

2023

          £'000

 

 

 

Profit for the year

4,254

3,903


 


Adjusting items (all costs):

 


Non-underlying items

 


Share based payments

128

351

Amortisation of acquired intangible assets

1,558

1,795

Exceptional items

 


Reorganisation costs

447

-

Impairment of intangible assets (net of tax)

-

3,441

Acquisition costs

155

331

Total adjusting items

2,288

5,918

 

 


Less taxation on adjusting items calculated at the UK statutory rate

(462)

(369)

Adjusted profit for the year

6,080

9,452


 


Divided by diluted weighted average number of shares in issue

(note 10)

105,253,543

104,799,252


 


Adjusted Diluted EPS

5.78p

9.02p

 

 

The following table is included to define the term Net Operating Assets:

 

 

 

2024

£'000

*Restated

2023

£'000

 

 

Net assets

45,430

41,292


 

 

Deferred tax asset

(144)

(148)

Corporation tax asset

(87)

-

Cash and cash equivalents

(1,430)

(2,711)

Borrowings and lease liabilities (current and non-current)

21,477

22,741

Deferred & contingent consideration

-

961

Deferred tax liability

4,841

4,750

Current tax payable

-

111

24,657

25,704


 

 

Net Operating Assets

70,087

66,996

 

 

*See note 13

 

 

 

 

 

4          SEGMENT ANALYSIS

 

The Digital Imaging segment incorporates the Synoptics brands Syngene, Synbiosis, Synoptics Health and Fistreem, the Atik brands Atik Cameras, Opus and Quantum Scientific Imaging, and Graticules Optics. These businesses share significant characteristics including customer application, technology, and production location. Revenues derive from the sale of instruments, components for original equipment manufacturer ("OEM") customers' instruments, from accessories and service and from licence income.

 

The Sensors & Control segment combines our Sentek, Astles Control Systems, Applied Thermal Control, Thermal Exchange, MPB Industries, Chell Instruments, Monmouth Scientific, Uniform Engineering, Scientific Vacuum Systems, Safelab Systems, LTE Scientific, Fraser Anti-Static Techniques and Peak Sensors businesses. All of these businesses provide products that enable accurate control of scientific and industrial equipment. Their revenues also derive from the sale of instruments, major components for OEM customers' instruments, and from accessories and service.

 

The Board of Directors reviews operational results of these segments on a monthly basis and decides on resource allocations to the segments and is considered the Group's chief operational decision maker.

 

 

 

 

2024
Total
£'000

2023
Total
£'000

Revenues

 

 

Digital Imaging

10,959

20,870

Sensors & Control

54,887

46,707

Group

65,846

67,577


 

 

Adjusted Operating Profit

 

 

Digital Imaging

2,020

6,873

Sensors & Control

9,388

8,045

Central costs

(1,830)

(2,109)

Group

9,578

12,809


 

 

Amortisation of acquired intangible assets

 

 

Digital Imaging

(183)

(175)

Sensors & Control

(1,375)

(1,620)

Group

(1,558)

(1,795)

 

Analysis of amortisation of acquired intangible assets has been included separately as the Group considers it to be an important component of profit which is directly attributable to the reported segments.

 

The Other category includes costs which cannot be allocated to the other segments and consists principally of Group head office costs.

 

 

 

2024
Total
£'000

2023
Total
£'000

Operating assets excluding acquired intangible assets

 

 

Digital Imaging

7,365

7,585

Sensors & Control

30,934

32,155

Central costs

827

1,075

Group

39,126

40,815


 

 

Acquired intangible assets

 

 

Digital Imaging

4,670

4,844

Sensors & Control

36,209

35,888

Group

40,879

40,732


 

 

Operating liabilities

 

 

Digital Imaging

(1,400)

(1,489)

Sensors & Control

(7,623)

(11,024)

Central costs

(895)

(2,038)

Group

(9,918)

(14,551)


 

 

Net operating assets

 

 

Digital Imaging

10,635

10,940

Sensors & Control

59,520

57,019

Central costs

(68)

(963)

Group

70,087

66,996

 

 

 

Depreciation

 

 

Digital Imaging

528

506

Sensors & Control

1,487

1,428

Central costs

7

7

Group

2,022

1,941

 

The geographical analysis of revenue by destination, analysis of revenue by product or service, and non-current assets by location are set out below:

 

Revenue by destination of external customer

 

2024

*Restated

2023


£'000

£'000


 


United Kingdom (country of domicile)

 36,809

35,387

Europe

 12,127

10,038

America

 8,342

5,392

Asia

6,976

15,255

Rest of World

1,592

1,505


65,846

67,577

 

*On reviewing the geographical disclosure, we have combined China and Asia (excluding China) which were £8,543k and £6,712k respectively last year.

 

 

 

 

Revenue by product or service:

2024

2023


£'000

£'000


 


Instruments and spare parts

61,046

63,616

Services

4,800

3,961


65,846

67,577

 

There was no customer with more than 10% of the revenue in the current year (2023: 12.6%).

 

 

Analysis of revenue by performance obligation:

2024

2023


£'000

£'000


 


Sale of goods, recognised at a point in time

56,534

61,490

Sale of services, recognised over time

4,801

3,961

Sale of goods, recognised over time

4,511

2,126


65,846

67,577

 

 

Non-current assets by location

2024

2023


£'000

£'000


 


United Kingdom

56,432

55,668

Portugal

581

701

America

220

89


57,233

56,458

 

 

 

 

5          Operating costs


2024

*Restated

2023


£'000

£'000


 


Raw materials and consumables

 24,297

24,810

Staff costs

 23,184

21,925

Exceptional items

-

3,520

Other administrative expenses

 11,179

10,622


 58,660

60,877

 

*The directors have reviewed the disclosure for the consolidated income statement and statement of comprehensive income. We consider the IAS1 presentation of expenses by nature better reflects SDI's business and hence have adjusted the format accordingly. We have also restated the prior year's results. This is a presentational adjustment only and does not impact on reported profit before tax. The exceptional item in the prior year represents an impairment of intangible assets (see note 11).

 


 

 

 

 

6          TaxATION



2024

2023



£'000

£'000

Current tax charge


 


Current year


1,703

2,209

Adjustments in respect to prior periods


25

(481)



 


Deferred tax charge


 


Origination and reversal of temporary differences


(234)

(422)

Adjustments in respect to prior periods


(85)

633



 

 

Total tax charge


1,409

1,939

 

 



2024

2023

Reconciliation of effective tax rate


£'000

£'000



 

 

Profit on ordinary activities before tax


5,663

5,842

Profit on ordinary activities multiplied by standard rate of

Corporation tax in the UK of 25% (2023: 19.493%)


1,416

1,139



 


Effects of:


 


Permanent differences


204

870

R&D expenditure credits


(258)

(234)

Adjustments to tax charge in respect of previous periods - current tax


25

(481)

Adjustments to tax charge in respect of previous periods - deferred tax


(85)

633

Foreign tax credits


15

-

Remeasurement of deferred tax for changes in tax rates


-

(20)

Movement in tax not recognised


120

-

Difference in overseas tax rate


(28)

32



1,409

1,939

 

The Group takes advantage of the enhanced tax deductions for Research and Development expenditure in the UK and expects to continue to be able to do so. 

 

The UK Finance Act 2021 which was substantively enacted on 24 May 2021 included provisions to increase the corporation tax rate to 25% effective from 1 April 2023.

 

 

7          TRADE AND OTHER Receivables





2024

2023





£'000

£'000







Trade receivables




10,571

9,276

Other receivables




325

846

Prepayments and accrued income




1,781

1,858





12,677

11,980

 

All amounts are short-term. All of the receivables have been reviewed for potential credit losses and Expected Credit Loss has been estimated.



 

8          Trade and other payables





2024

2023





£'000

£'000



 

 



Trade payables


 

 

3,567

4,147

Social security and other taxes


 

 

1,250

1,456

Deferred and contingent consideration


 

 

-

961

Other payables


 

 

431

314

Accruals, deferred income and contract liabilities


 

 

4,399

8,566



 

 

9,647

15,444

 

Accruals and deferred income includes an amount of £2,085k (2023: £4,811k) in respect of contract liabilities for revenues relating to performance obligations expected to be satisfied within the next 12 months. The contract liabilities balance has decreased during the year as those advanced payments have unwound. A significant amount of the contract liabilities of £4,811k were recognised as revenue during the current year.

 

During the year, contingent consideration of £961k was paid in relation to the acquisition of Scientific Vacuum Systems Limited and £nil remains outstanding at the year end (2023: £961k).

 

All amounts are short-term. The carrying values are considered to be a reasonable approximation of fair value.

 

 

9          Borrowings

Borrowings are repayable as follows:



2024


2023



£'000


£'000

Within one year





Finance lease liabilities


841


745



841


745






After one and within five years





Bank finance


14,600


16,000

Finance lease liabilities


6,036

 

5,996



20,636


21,996






Total borrowings


21,477


22,741

 

Bank finance relates to amounts drawn down under the Group's bank facility with HSBC Bank plc, which is secured against all assets of the Group. On 1 November 2021 the Group renewed and expanded its committed loan facility with HSBC to £20m, with an accordion option of an additional £10m and with a termination date of 1 November 2024 extendable for two further years. On 30 November 2022, the Group reached an agreement with HSBC to exercise £5m of an available £10m accordion option, which increased the committed loan facility from £20m to £25m. The balance of the accordion option (£5m) remains available to the Group (at the discretion of HSBC) for future exercise. In April 2024, HSBC approved an extension of the repayment date by one year to November 2026. At the end of the financial year the Group had drawn down £14.6m of its revolving credit facility (FY23: £16m), leaving £10.4m in headroom (excluding the additional £5m accordion option).

 

 

 

 

 

 

 

10         Earnings per share

The calculation of the basic earnings per share is based on the profits attributable to the shareholders of SDI Group plc divided by the weighted average number of shares in issue during the period. All profit per share calculations relate to continuing operations of the Group.

 

 

 

Profit

 attributable to

shareholders

£'000

Weighted

average

number of

shares

Earnings

per share

amount in

pence

Basic earnings per share:

 

 

 

Year ended 30 April 2024

4,254

104,099,565

4.09

Year ended 30 April 2023

3,903

102,761,812

3.80




 

Dilutive effect of share options:



 

Year ended 30 April 2024


1,153,978

 

Year ended 30 April 2023


2,037,440

 




 

Diluted earnings per share:

 

 

 

Year ended 30 April 2024

4,254

105,253,543

4.04

Year ended 30 April 2023

3,903

104,799,252

3.72

 

At the year end, there were 1,421,200 (2023: 587,000) share options which were anti-dilutive but may be dilutive in the future.

 


 

 

 

11         INTANGIBLE ASSETS

The amounts recognised in the balance sheet relate to the following:


Customer relationships

Other intangibles

Goodwill

Development costs

Total

 

£'000

£'000

£'000

£'000

£'000

Cost






As at 1 May 2022

16,607

2,410

20,107

2,868

41,992

Additions

-

-

290

323

613

Additions on acquisition

4,643

394

5,500

-

10,537

Disposals/Eliminations

-

-

-

(1,178)

(1,178)

As at 1 May 2023

21,250

2,804

25,897

2,013

51,964

Adjustments to goodwill

-

-

24

-

24

Additions

-

-

-

820

820

Additions on acquisition

660

10

1,139

-

1,809

Disposals/Eliminations

-

-

-

(298)

(298)

As at 30 April 2024

21,910

2,814

27,060

2,535

54,319





 


Amortisation and impairment




 


As at 1 May 2022

3,008

1,004

-

1,945

5,957

Amortisation for the year

1,271

533

-

511

2,315

Impairment

314

-

3,206

-

3,520

Disposals/Eliminations

-

-

-

(1,178)

(1,178)

As at 1 May 2023

4,593

1,537

3,206

1,278

10,614

Amortisation for the year

1,431

137

-

395

1,963

Disposals/Eliminations

-

-

-

(298)

(298)

At 30 April 2024

6,024

1,674

3,206

1,375

12,279


 

 

 

 


Net book value

 

 

 

 

 

As at 30 April 2024

15,886

1,140

23,854

1,160

42,040

As at 30 April 2023

16,657

1,267

22,691

735

41,350

 

Capitalised development costs include amounts totalling £550k (2023: £243k) relating to incomplete projects for which amortisation has not yet begun.

 


 

 

Goodwill relates to various acquisitions and has been allocated to each cash generating unit as appropriate. The cash generating units used to test impairment are generally the individual acquired businesses, or, where these have been operationally merged with others, the resulting merged businesses. Goodwill is not amortised but tested for impairment annually with the recoverable amount being determined from value in use calculations. Goodwill has been allocated for impairment testing to each Cash Generating Unit (CGU), as follows:

 




2024

2023





£'000

£'000





 


Synoptics




453

453

Atik




1,229

1,229

Graticules




1,278

1,278

Sentek




1,282

1,282

Astles Control Systems




2,503

2,503

Applied Thermal Control




1,028

1,028

MPB Industries




630

630

Chell Instruments




2,492

2,492

Scientific Vacuum Systems




2,734

2,734

Safelab Systems




3,561

3,561

LTE Scientific




676

676

Fraser Anti-Static Techniques




4,849

4,825

Peak Sensors Limited




1,139

-

 

 

 

 

23,854

22,691

 

During the year, Goodwill was tested for impairment in accordance with IAS 36. The recoverable amount of the Group's Goodwill was assessed by reference to the Value-In-Use ("VIU") calculations derived from 3-year budgeted cash flows and 2 years of extrapolated cash flows using inflationary growth rates (2% to 10% p.a.). This is equivalent to a 5-year forecast period, which is the maximum period expected unless a longer period is justifiable. Management's key assumption for all cash generating units and resulting cash flows is to maintain market share in their markets. Thereafter, the VIU is based on estimated long-term growth ("LTG") rates of 2% (2023: 2%).

 

A risk-adjusted, pre-tax discount rate specific to each individual CGU has been calculated and these all ranged between 16.67% and 20.67% (2023: 15.33% to 17%). The pre-tax discount rates have been prepared on a CGU basis given that the CGUs all operate across differing regions, and they all have a different capital structure and fixed asset base.

No impairments have been recognised across any CGUs.

 

The Directors have further considered the sensitivity of the key assumptions to changes, including reduced growth rates and operating margins, and increased discount rates. The Growth rates are based on economic data for the wider economy and represent a prudent expectation of growth.

The average remaining amortisation period of intangible assets excluding Goodwill is 9.3 years (2023: 8.1 years).

12         BUSINESS COMBINATIONS

On 3 November 2023, the Company acquired 100% of the share capital of Peak Sensors Limited, a company incorporated in England and Wales, for a consideration payable in cash.

 

The assets and liabilities acquired were as follows:


Book value

£'000

Fair Value

adjustment

£'000

 

Fair Value

£'000

Assets




Non-current assets

             



Intangible assets

10

660

670

Right-of-use assets

183

-

183

Property, plant & equipment

42

-

42

Total non-current assets

235

660

895

 




Current assets




Inventories

465

(50)

415

Trade and other receivables

620

-

620

Cash and cash equivalents

98

-

98





Liabilities




Trade and other payables

(335)

-

(335)

Borrowings - lease commitments

(183)

-

(183)

Deferred tax liability

-

(165)

(165)

Net assets acquired

900

445

1,345

 

Goodwill



 

1,139

Consideration and cost of investment

 

 

2,484

 




Fair value of consideration transferred




Cash paid in year 



2,484




2,484

 

Total cash paid in the year amounts to £2,386k being the cash paid in the year of £2,484k less cash on acquisition of £98k.

 

Peak Sensors Limited contributed £990k revenue and approximately £124k to the Group's profit before tax for the period between the date of acquisition and the balance sheet date, not including £33k of acquired intangible asset amortisation.

 

If the acquisition of Peak Sensors Limited had been completed on the first day of the financial year, the additional impact on group revenues for the period would have been £1,350k and the additional impact on group profit would have been approximately £230k, before additional £33k of amortisation expense.

 

The goodwill of £1,139k arising from the acquisition relates to the expected future profitability, synergy and growth expectations.

 

A third-party expert performed a detailed review of the acquired intangible assets and recognised acquired customer relationships and order book.  The customer relationships intangible asset was valued using a multi-period excess earnings methodology. The estimated fair value of the customer relationships therefore reflects the present value of the projected stream of cash flows that are expected to be generated by existing customers going forwards, net of orders on hand at the date of acquisition. Key assumptions are the discount rate and attrition rate.  Values of 16.5% and 15% were selected. After consulting with management to discuss their findings, management were in agreement with the inputs used and results obtained.

 

The deferred tax liability has been calculated on the amortisable intangible assets using the current enacted statutory tax rate of 25%.

 

The last financial year for Peak Sensors Limited before the acquisition completed was to 31 March 2023 and the current financial year has been extended by one month to April 2024 to align with that of SDI Group plc.


13         Prior year restatement

In prior years, the deferred tax assets and liabilities were shown gross of one another whereas they should have been netted off by jurisdiction. This has been corrected. As a result of this restatement, previously reported non-current assets and total assets for the year ended 30th April 2023 and 30th April 2022 have decreased by £586k and £1,559k respectively and previously reported provisions for liabilities and charges and total liabilities have also decreased by £586k and £1,559k respectively. The previously reported net asset figures for the year ended 30th April 2023 and 30th April 2022 are unchanged. There has been no impact on previously reported profits in either year.

 

The following table summarises the prior year restatement:

 


As at 30th April 2023

As at 1st May 2022


As previously stated

Restated

Difference

As previously stated

Restated

Difference


£'000

£'000

£'000

£'000

£'000

£'000








Deferred tax asset

734

148

586

1,586

27

1,559

Non-current assets

56,796

56,210

586

49,000

47,441

1,559

Total assets

84,991

84,405

586

68,923

67,364

1,559








Deferred tax liability

(5,336)

(4,750)

(586)

(4,417)

(2,858)

(1,559)

Provisions for liabilities and charges

(27,332)

(26,746)

(586)

(15,073)

(13,514)

(1,559)

Total liabilities

(43,699)

(43,113)

(586)

(33,131)

(31,572)

(1,559)








Net assets

41,292

41,292

-

35,792

35,792

-

 

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