REG - SDI Group PLC - Final Results
30/07/2024 07:00
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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 +44 (0)1223 727144
Stephen Brown, Chief Executive Officer www.sdigroup.com (http://www.sdigroup.com)
Amitabh Sharma, Chief Financial Officer
Cavendish Capital Markets Ltd (NOMAD & broker) +44 (0)20 7220 0500
Ed Frisby/Seamus Fricker - Corporate Finance
Andrew Burdis/Sunila de Silva - ECM
Vigo Consulting (Financial Communications) +44 (0)20 7390 0230
Tim McCall / Rozi Morris / Fiona Hetherington 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 (http://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 25(th) 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: 30(th) 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: 30(th) 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 2023
Total
Total
£'000
£'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: 30(th) 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 *Restated
£'000
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 *Restated *Restated
30 April 2024 30 April 2023 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 30(th) 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):
*Restated
2024 2023
£'000 £'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 2023
£'000 £'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 2023
£'000 £'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 2023
£'000 £'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 105,253,543 104,799,252
(note 10)
Adjusted Diluted EPS 5.78p 9.02p
The following table is included to define the term Net Operating Assets:
*Restated
2024 2023
£'000 £'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
Total adjusting items within Net assets 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 2023
Total
Total
£'000
£'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 2023
Total
Total
£'000
£'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 *Restated
2024 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 1,416 1,139
Corporation tax in the UK of 25% (2023: 19.493%)
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 Weighted Earnings
attributable to average per share
shareholders number of amount in
£'000 shares
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 Fair Value
£'000 adjustment Fair Value
£'000 £'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 30(th) April 2023 and
30(th) 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 30(th) April 2023 and
30(th) 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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