REG - SDI Group PLC - Interim Results
07/12/2022 07:01
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RNS Number : 8145I SDI Group PLC 07 December 2022
SDI Group plc
("SDI", "SDI Group", the "Company", or the "Group")
Interim results for the six months ended 31 October 2022
SDI Group plc, the AIM quoted Group focused on the design and manufacture of
scientific and technology products for use in digital imaging and sensing and
control applications, is pleased to announce another strong set of results and
solid operational progress for the six months to the end of October 2022.
Financial Highlights
· Revenue increased by 28.3% to £31.7m (H1 FY22: £24.7m)
· Adjusted operating profit* for the period increased by 19.0% to
£6.9m (H1 FY22: £5.8m)
o Reported operating profit increased by 7.7% to £5.6m (H1 FY22: £5.2m)
· Adjusted profit before tax* increased by 14.0% to £6.5m (H1
FY22: £5.7m)
o Reported profit before tax increased by 3.9% to £5.3m (H1 FY22: £5.1m)
· Adjusted diluted EPS* increased by 28.1% to 5.02p (H1 FY22:
3.92p)
o Reported diluted EPS increased by 18.4% to 4.06p (H1 FY22: 3.43p)
Operational Highlights
· Two new acquisitions added to the Group - LTE Scientific Limited and
Fraser Anti-Static Techniques Limited
· Growth over the first half of FY23, including 3.8% organic growth
and 24.5% from acquisitions
Ken Ford, Chairman of SDI Group, said:
"We are pleased to report yet another strong set of financial results. SDI
Group continues to execute on its business model, adding two quality
businesses to our portfolio and maintaining growth. A higher interest rate
environment will lead to a small increase in interest rate expense in the
second half. We look forward to delivering a full year trading performance in
line with market expectations."
*before acquisition costs, share based payments, reorganisation costs and
amortisation of acquired intangible assets.
Analysts from our Broker finnCap Limited and from Progressive Equity Research
regularly provide research on the Company, and the Group considers the average
of their forecasts to represent market expectations for FY23 being Sales of
£66.3m and Adjusted Operating Profit of £12.80m
Enquiries
SDI Group plc
01223
727144
Ken Ford, Chairman
Mike Creedon, CEO
Ami Sharma, CFO
www.sdigroup.com
finnCap Ltd
020 7220 0500
Ed Frisby/Seamus Fricker/Milesh Hindocha - Corporate Finance
Andrew Burdis/Sunila de Silva - ECM
SDl Group plc is an AIM quoted company specialising in the design and
manufacture of products for use within a number of imaging and sensing and
control applications including life sciences, healthcare, plastics and
packaging, astronomy, precision optics, measurement instrumentation and art
conservation markets.
Corporate expansion is via organic growth within its subsidiary companies and
through the acquisition of complementary, niche technology businesses with
established reputations in global markets.
No statement in this announcement is intended to be a profit forecast or
estimate and no statement in this announcement should be interpreted to mean
that earnings per share of the Company for the current or future financial
years would necessarily match or exceed the historical published earnings per
share of the Company.
Chairman's statement
As the coronavirus pandemic partly recedes into the rear-view mirror, we
emerge into a different more uncertain world, with high inflation and the UK
economy fast approaching a recession, if it is not there already. In this sort
of environment, our agile business model, which involves smaller niche
autonomous businesses operating in a multitude of markets gives us the ability
to respond quickly to market movements. We are still delivering products at
volume that are being used in the Covid detection effort but, as previously
communicated, it is expected that this will reduce over the second half of the
year. However, our businesses have room to grow in their markets and we expect
that to continue.
We acquired two new businesses in the first half of the financial year in line
with our growth strategy. This brings the total number of businesses acquired
over the calendar year to four. LTE Scientific Limited ("LTE") was acquired in
July and Fraser Anti-Static Techniques Limited ("Fraser") in October. LTE is a
UK company which specialises in the design, manufacture and servicing of
sterilizers, decontamination and thermal processing equipment, used in the
life science and medical market sectors. Fraser is a leading UK manufacturer
of anti-static products which eliminate, clean, generate or measure static
electricity in a variety of industries including plastics, packaging and
printing, amongst others. Fraser's technologies and markets are unrelated to
our current portfolio. However, LTE operates in a market with which we are
already familiar. Both companies fit perfectly within our acquisition criteria
and have become part of our Sensors and Control segment. These businesses will
be operated separately from our existing businesses. We warmly welcome our new
colleagues to the SDI Group.
Board
As previously communicated, Ami Sharma took over as CFO in August from Jon
Abell who retired in September after a handover period.
In August, Andrew Hosty was appointed to the Board as a non-executive director
as Isabel Napper stepped down. The Board intends to appoint another
non-executive director in due course.
Trading
Demand from OEM customers was more variable this half year than the equivalent
period last year. A strong market for chiller products and cameras was offset
to some degree by continuing subdued demand for capital equipment purchases
for general laboratory use. Positively, the easing of pandemic rules has made
servicing activity easier to arrange and carry out. In common with
manufacturing industry across the world, and perhaps especially in the UK, the
pandemic is causing supply chain issues to all our businesses. These
continue to be a significant drain on management time, and our businesses are
having to work hard to source components or modify designs for missing ones.
This is expected to continue. It has impacted upon the timing of deliveries
for some of our businesses.
Inflationary cost increases have, in general, been passed on to customers
where possible and gross margins have generally held.
The good news is that the general level of sales enquiries remains at a strong
level. Prior to the pandemic, trade fairs and exhibitions provided a robust
avenue for generating sales leads and meeting OEMs. It is pleasing to report
that in-person trade fairs and exhibitions have re-started and several of our
businesses have attended them, with positive feedback received. Examples
include ACHEMA (Berlin), Analytica (Frankfurt) and VISION (Stuttgart). Direct
face to face meetings with customers, an effective method of launching new
products, have become more common as business life starts to return to some
level of normality.
The addition of LTE to the Group adds to our existing businesses, Monmouth,
Safelab Systems and Synoptics, which sell into the laboratory market and
provides an opportunity for synergies. The Group will maintain the identity
and autonomy of these companies in their current locations, but the businesses
are actively seeking and finding areas of co-operation to reduce costs and
enhance their total customer offer.
Revenues
Group revenues increased by 28.3% to £31.7m (H1 FY22: £24.7m). The increase
was driven by two major factors:
· Our Atik Cameras business has continued to increase revenues year on
year. This has been driven by sales of cameras to an international OEM for use
in PCR machines as well as increased general demand for other types of
cameras. We expect current orders, paid for in advance of shipment, to be
fulfilled over the second half of the financial year, and we have no
visibility of further orders from the international OEM customer. The business
has, however, experienced strong organic growth when excluding this contract.
· Acquisitions over the second half of FY22 and the first half of FY23,
SVS, Safelab Systems and LTE, delivered £6.1m of sales. Both SVS and Safelab
Systems are ahead of expectations, with LTE being acquired recently. Fraser
was acquired at the very end of H1 FY23.
Organic revenue growth across the business was 3.8%. The three-year pandemic
period from FY20 to FY22 produced revenue and profit fluctuations which have
not fully settled yet, but H1 FY23 has stronger comparatives than H1 FY22. As
noted above Atik Cameras continue to deliver on their large PCR camera order,
whilst strong demand for scientific and industrial cooling systems drove
growth at Applied Thermal. This was offset by a softer post COVID market for
both Monmouth Scientific and Synoptics, particularly in the UK. Component
delays have impacted upon Astles Control Systems and Chell Instruments
delivery timings, but Sentek experienced strong demand for chemical sensors.
Sales in our Digital Imaging segment grew by 9.6% to £12.5m (H1 FY22:
£11.4m) and sales in Sensors & Control were 44.4% higher at £19.2m (H1
FY22: £13.3m), the latter all acquisition driven.
Profits
Gross margins were lower than in H1 FY22, due to mix, with the acquisitions
having slightly lower gross margins than the Group average. We have increased
prices to offset the impacts of component and raw material price increases,
and generally we have seen customer acceptance of this.
Overheads are higher than the comparative period mainly due to acquisitions,
inflation, both for salaries and other overheads and some organic headcount
increases. Most of our power and heat costs are fixed until Q1 2023.
Adjusted Group profit before tax increased by 14.0% to £6.5m (H1 FY22:
£5.7m). Statutory Group profit before tax increased by 3.9% to £5.3m (H1
FY22: £5.1m) driven by the organic revenue growth and the contribution of the
H2 FY22 acquired businesses.
In addition to the performance measures defined under IFRS, the Group also
provides adjusted results in which certain one-time and non-cash charges are
excluded, to help shareholders understand the underlying operating
performance. Adjustments for the period were for the amortisation of acquired
intangible assets, share-based payments and acquisition costs totalling £1.2m
(H1 FY22: £0.6m).
Our effective tax rate (on adjusted profit before tax) was 16.2% (H1 FY22:
26.7%). The prior period effective tax rate was higher as it included an
adjustment of £0.6m to align certain deferred tax assets and liabilities
(except for deferred tax assets related to share options) to the new UK
corporate tax rate of 25.0% from April 2023.
A £0.2m favourable impact from aligning the deferred tax asset for future
share option gains to current share prices and tax rates has been booked
directly to equity.
Basic earnings per share increased by 15.0% to 4.15p (H1 FY22: 3.61p); diluted
earnings per share increased by 18.4% to 4.06p (H1 FY22: 3.43p). Adjusted
diluted earnings per share increased by 28.1% to 5.02p (H1 FY22: 3.92p).
Cash flow
Cash generated from operations reduced to £1.9m (H1 FY22: £4.4m). The
reduction was due to a £2m build-up of inventories to mitigate the impact of
component shortages and PCR camera deliveries due to be shipped over the
second half of the year and a £1.3m reduction in customer advances, largely
due to PCR camera shipments in the first half.
The Group acquired two businesses over the period (see below). A total of
£20.9m in cash was paid offset by a net £6.7m of cash acquired with the two
businesses. In June 2022 we paid the deferred consideration of £2.4m for the
prior year acquisition of Safelab Systems Limited. A further £1.0m in
deferred consideration relating to the acquisition of Scientific Vacuum
Systems Limited remains outstanding pending assessment of the earn-out
conditions and is accrued in trade and other payables.
Net debt, or bank debt less cash, was £15.4m at 31 October 2022, compared to
a net cash position at 30 April 2022 and 31 October 2021 of £1.1m at both
dates. This represents a net debt: EBITDA ratio of 1.0x, which compares to a
2.5x ceiling provided by our bank facility. At 31 October 2022, the Group had
£1m of headroom within its £20m committed loan facility with HSBC. 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, hence increasing the available head room to £6m. The
balance of the accordion option (£5m) remains available to the Group (at the
discretion of HSBC) for future exercise. 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.
Operations
Whilst staff turnover generally remains low, we continue to experience a tight
labour market. We have managed to fill some, but not all, skilled vacancies
relatively quickly. Cost increases, in relation to materials, have generally
been passed on to customers.
Our rolling programme of upgrading manufacturing facilities across the Group
continues with the refurbishment of the Graticules Optics factory in
Tonbridge. This investment will bring a capacity increase as well as improving
efficiency, staff comfort, product quality and image.
We continue to invest in expanding and enhancing our product range. The hiring
of some new marketing talent has also resulted in some improved website
designs with positive results to date.
Acquisitions
On 29 July 2022, the Group acquired 100% of the share capital of LTE for a
total consideration of £5.5m, which included freehold ownership of its
manufacturing facility, valued at approximately £1.7m. On the date of the
acquisition, LTE had £2.6m of cash in hand.
LTE specialises in the design, manufacture and servicing of sterilizers,
decontamination and thermal processing equipment, used in the life science and
medical market sectors. Other manufactured products include environmental
rooms and chambers, endoscope storage cabinets, laboratory ovens, incubators
and drying cabinets. LTE operates in similar markets to Monmouth Scientific
and Safelab Systems, albeit with different products, and is based in
Greenfield, Greater Manchester.
On 21 October 2022, the Group acquired 100% of the share capital of Fraser
Anti-Static Techniques Limited ("Fraser"), for a total consideration of
£16.9m, of which £15.4m was paid before the period end and £1.5m (accrued
in other payables) is due to be paid over the second half of the financial
year. Approximately £1.0m of the deferred consideration is based on net
assets on completion date. The total consideration includes freehold ownership
of three of Fraser's manufacturing sites, valued at approximately £1.8m, and
the business had approximately £4.1m of cash in hand on the date of
completion.
Fraser is a leading UK manufacturer of anti-static products which eliminate,
clean, generate or measure static electricity in a variety of industries
including plastics, packaging, printing, food processing, medical and pharma
amongst others. The business has sites in Bampton, Devon and Bristol as well
as sales offices in Shanghai, China and Dresden, Germany. Fraser's markets are
mainly global, and the business is considered to be one of the top ten
suppliers of anti-static products.
Outlook
The COVID 19 related orders at Atik will complete this financial year, as has
been previously communicated. The weighting of these camera deliveries are
skewed to the first half of the year. SDI Group continues to execute on its
business model, adding two quality businesses to our portfolio and maintaining
growth. A higher interest rate environment will lead to a small increase in
interest rate expense in the second half. We look forward to delivering a
full year trading performance in line with market expectations.
Ken Ford, Chairman
7 December 2022
Consolidated income statement
Unaudited for the six months ended 31 October 2022
6 months to 6 months to 12 months to
31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
Note £'000 £'000
£'000
Revenue 31,720 24,655 49,656
Costs of sales (11,764) (8,783) (17,998)
Gross Profit 19,956 15,882 31,658
Other operating income 50 20 55
Operating expenses (14,383) (10,695) (21,534)
Operating profit 5,623 5,207 10,179
Net financing expense (318) (105) (295)
Profit before taxation 5,305 5,102 9,884
Income tax charge 8 (1,061) (1,526) (2,341)
Profit for the period 4,244 3,576 7,543
Earnings per share 5
Basic earnings per share 4.15p 3.61p 7.53p
Diluted earnings per share 4.06p 3.43p 7.23p
Consolidated statement of comprehensive income
Unaudited for the six months ended 31 October 2022
6 months to 6 months to 12 months to
31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
£'000 £'000
£'000
Profit for the period 4,244 3,576 7,543
Other comprehensive income
Exchange differences on translating foreign operations
170 (161) 46
Total comprehensive profit for the period
4,414 3,415 7,497
Consolidated balance sheet
Unaudited at 31 October 2022
Note 31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
£'000 £'000
£'000
Assets
Non-current assets
Intangible assets 47,264 25,730 36,035
Property, plant and equipment 15,015 4,225 11,379
Deferred tax asset 8 1,547 1,660 1,586
63,826 31,615 49,000
Current assets
Inventories 12,066 6,957 7,273
Trade and other receivables 11,566 7,786 7,544
Cash and cash equivalents 3,619 3,513 5,106
27,251 18,256 19,923
Total assets 91,077 49,871 68,923
Liabilities
Non-current liabilities
Borrowings 6 19,000 1,029 4,000
Lease liabilities 6 6,304 1,936 6,656
Deferred tax liability 8 5,795 2,993 4,417
31,099 5,958 15,073
Current liabilities
Trade and other payables 16,543 9,727 16,089
Provisions 88 230 163
Borrowings 6 - 1,371 -
Lease liabilities 6 802 498 779
Current tax payable 1,889 1,165 1,027
19,322 12,991 18,058
Total liabilities 50,421 18,949 33,131
Net assets 40,656 30,922 35,792
Equity
Share capital 1,027 996 1,022
Merger reserve 2,606 2,606 2,606
Merger relief reserve 424 424 424
Share premium account 10,093 9,359 9,905
Share-based payment reserve 656 728 320
Foreign exchange reserve 209 (76) 39
Retained earnings 25,641 16,885 21,476
Total equity 40,656 30,922 35,792
Consolidated statement of cash flows
Unaudited for the six months ended 31 October 2022
Note 6 months to 6 months to 12 months to
31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
£'000 £'000
£'000
Operating activities
Net profit for the period 4,244 3,577 7,543
Depreciation and amortisation 2,010 1,315 2,773
Finance costs and income 318 105 295
Impairment of intangibles - - 30
Changes in provisions (75) - (97)
Taxation expense in the income statement 1,061 1,526 2,341
Employee share-based payments 140 159 313
Operating cash flow before movement in working capital 13,198
7,698 6,682
Changes in inventories (1,906) (886) (365)
Changes in trade and other receivables (1,070) (573) 652
Changes in trade and other payables (2,847) (808) 1,204
Cash generated from operations 1,875 4,415 14,689
Interest paid (318) (105) (295)
Income taxes paid (691) (735) (1,290)
Cash generated from operating activities 866 3,575 13,104
Cash flows from investing activities
Capital expenditure on fixed assets (443) (510) (1,426)
Sale of property plant and equipment 10 32 66
Expenditure on development and other intangibles (183) (115) (415)
Acquisition of subsidiaries, net of cash 7 (16,523) (2,500) (10,995)
Net cash used in investing activities (17,139) (3,093) (12,770)
Cash flows from financing activities
Payments of lease liabilities (386) (296) (583)
Proceeds from bank borrowings 15,000 - 9,000
Repayment of borrowings - (686) (8,086)
Issues of shares & proceeds from option exercises - 278 651
Net cash from/(used in) financing activities 14,614 (704) 982
Net (decrease)/increase in cash and cash equivalents 1,316
(1,659) (222)
Cash and cash equivalents, beginning of period 5,106 3,836 3,836
Foreign currency movements on cash balances 172 (101) (46)
Cash and cash equivalents, end of period 3,619 3,513 5,106
Consolidated statement of changes in equity
Unaudited for the six months ended 31 October 2022
6 months to 31 October 2022 - unaudited Share Merger Foreign Share Share-based payment reserve Retained
capital reserve Merger relief reserve exchange premium £'000 earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
£'000
Balance at 1 May 2022 1,022 2,606 424 39 9,905 320 21,476 35,792
Shares issued 5 - - - 188 - - 193
Tax in respect to share options - - - - - - 117 117
Share-based payments transfer - - - - - 196 (196) -
Share based payments - - - - - 140 - 140
Transactions with owners 5 - - - 188 336 (79) 450
Profit for the period - - - - - - 4,244 4,244
Foreign exchange on consolidation of subsidiaries
- - - 170 - - - 170
Total comprehensive income for the period
- - - 170 - - 4,244 4,414
Balance at 31 October 2022 1,027 2,606 424 209 10,093 656 25,641 40,656
6 months to 31 October 2021 - unaudited Share Merger Foreign Share Share-based payment reserve Retained
capital reserve Merger relief reserve exchange premium £'000 earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
£'000
Balance at 1 May 2021 984 2,606 424 85 9,092 714 12,869 26,774
Shares issued 12 - - - 267 - - 279
Tax in respect to share options - - - - - - 295 295
Share-based payments transfer - - - - - (145) 145 -
Share based payments - - - - - 159 - 159
Transactions with owners 12 - - - 267 14 440 733
Profit for the period - - - - - - 3,576 3,576
Foreign exchange on consolidation of subsidiaries
- - - (161) - - - (161)
Total comprehensive income for the period
- - - (161) - - 3,576 3,415
Balance at 31 October 2021 996 2,606 424 (76) 9,359 726 16,885 30,922
12 months to 30 April 2022 - audited Share Merger Foreign Share Share-based payment reserve Retained Total
capital reserve Merger relief reserve exchange premium £'000 earnings
£'000
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 April 2021 984 2,606 424 85 9,092 714 12,869 26,774
Shares issued 38 - - - 813 - - 851
Tax in respect to share options - - - - - - 357 357
Share-based payments transfer - - - - - (707) 707 -
Share based payments - - - - - 313 - 313
Transactions with owners 38 - - - 813 (394) 1,064 1,521
Profit for the year - - - - - - 7,543 7,543
Foreign exchange on consolidation of subsidiaries - - - (46) - - - (46)
Total comprehensive income - - - (46) - - 7,543 7,497
Balance at 30 April 2022 1,022 2,606 424 39 9,905 320 21,476 35,792
Notes to the interim financial statements
1. General information and basis of preparation
SDI Group plc (the "Company"), a public limited company, is the Group's
ultimate parent. It is registered in England and Wales. The consolidated
interim financial statements of the Company for the period ended 31 October
2022 comprise the Company and its subsidiaries (together referred to as the
"Group").
The unaudited consolidated interim financial statements are for the six months
ended 31 October 2022. These interim financial statements have been prepared
using the recognition and measurement principles of International Accounting
Standards in conformity with the requirements of the Companies Act 2006. The
consolidated interim financial information has been prepared under the
historical cost convention, as modified by the recognition of certain
financial instruments at fair value. The consolidated interim financial
statements are presented in British pounds (£), which is also the functional
currency of the ultimate parent company.
The consolidated interim financial information was approved by the Board of
Directors on 7 December 2022.
The financial information set out in this interim report does not constitute
statutory accounts as defined in section 435 of the Companies Act 2006. The
figures for the year ended 30 April 2022 have been extracted from the
statutory financial statements of SDI Group plc which have been filed with the
Registrar of Companies. The auditor's report on those financial statements was
unqualified and did not contain a statement under section 498(2) or 498(3) of
the Companies Act 2006. The financial information for the six months ended 31
October 2022 and for the six months ended 31 October 2021 has not been
audited.
2. Principal accounting policies
The principal accounting policies adopted in the preparation of the condensed
consolidated interim information are consistent with those followed in the
preparation of the Group's financial statements for the year ended 30 April
2022.
The accounting policies have been applied consistently throughout the Group
for the purposes of preparation of these interim financial statements.
3. Alternative Performance Measures
The Group uses 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).
The following table is included to define the term Adjusted Operating Profit:
6 months to 6 months to 12 months to
31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
£'000 £'000
£'000
Operating Profit (as reported) 5,623 5,207 10,179
Adjusting items (all costs):
Non-underlying items
Share based payments 140 159 313
Amortisation of acquired intangible assets 823 465 1,115
Exceptional items
Reorganisation costs - - 125
Acquisition costs 267 - 341
Total adjusting items within Operating Profit 1,230 624 1,894
Adjusted Operating Profit 6,853 5,831 12,073
Adjusted Profit Before Tax is defined as follows:
6 months to 6 months to 12 months to
31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
£'000 £'000
£'000
Profit Before Tax (as reported) 5,305 5,102 9,884
Adjusting items (as above) 1,230 624 1,894
Adjusted Profit Before Tax 6,535 5,726 11,778
3. Alternative Performance Measures (continued)
Adjusted EPS is defined as follows:
6 months to 6 months to 12 months to
31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
£'000 £'000
£'000
Profit for the Period (as reported) 4,244 3,576 7,543
Adjusting items (as above) 1,230 624 1,894
Less: taxation on adjusting items calculated at the UK statutory rate
(234) (119) (360)
Adjusted profit for the period 5,240 4,081 9,077
Divided by diluted weighted average number of shares in issue (Note 5) 104,411,856 104,138,768 104,259,085
Adjusted Diluted EPS 5.02p 3.92p 8.71p
Net Operating Assets is defined as follows:
31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
£'000 £'000
£'000
Net Assets 40,656 30,922 35,792
Deferred tax asset 1,547 1,660 1,586
Corporation tax asset 569 486 137
Cash and cash equivalents 3,619 3,513 5,106
Borrowings (current and non-current) (26,106) (4,834) (11,435)
Deferred consideration (2,460) - (3,305)
Deferred tax liability (5,795) (2,993) (4,417)
Current tax payable (1,889) (1,165) (1,027)
Total adjusting items within Net Assets (30,515) (3,333) (13,355)
Net Operating Assets 71,171 34,255 49,147
4. Segmental analysis
6 months to 6 months to 12 months to
31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenues
Digital Imaging 12,529 11,373 21,492
Sensors & Control 19,191 13,292 28,164
Group 31,720 24,665 49,656
Adjusted operating profit
Digital Imaging 4,692 4,253 8,502
Sensors & Control 2,914 2,505 5,188
Other (753) (927) (1,617)
Group 6,853 5,831 12,073
Amortisation of acquired intangible assets
Digital Imaging (92) (92) (175)
Sensors & Control (735) (377) (940)
Group (827) (469) (1,115)
Adjusted Operating Profit has been defined in Note 3.
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.
4. Segmental analysis (continued)
31 October 31 October 30 April
2022 2021 2022
Unaudited Unaudited Audited
£'000 £'000 £'000
Operating Assets excluding acquired intangible assets
Digital Imaging 8,191 9,612 7,501
Sensors & Control 29,868 9,757 19,045
Other 676 (257) 247
Group 38,735 19,112 26,793
Acquired intangible assets
Digital Imaging 4,932 5,107 5,019
Sensors & Control 41,675 19,978 30,282
Group 46,607 25,085 35,301
Operating Liabilities
Digital Imaging (3,133) (4,650) (4,905)
Sensors & Control (10,383) (4,192) (7,075)
Other (655) (1,101) (968)
Group (14,171) (9,943) (12,948)
Net Operating Assets
Digital Imaging 9,989 10,069 7,616
Sensors & Control 61,161 25,543 42,251
Other 21 (1,357) (720)
Group 71,171 34,255 49,147
Net operating assets has been defined in Note 3.
5. 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:
Period ended 31 October 2022 4,244 102,215,980 4.15
Period ended 31 October 2021 3,576 99,120,392 3.61
Year ended 30 April 2022 7,543 100,122,394 7,53
Dilutive effect of share options:
Period ended 31 October 2022 2,195,876
Period ended 31 October 2021 5,018,376
Year ended 30 April 2022 4,136,692
Diluted earnings per share:
Period ended 31 October 2022 4,244 104,411,856 4.06
Period ended 31 October 2021 3,576 104,138,768 3.43
Year ended 30 April 2022 7,543 104,259,085 7.23
6. Borrowings
31 October 31 October 30 April
2022 2021 2022
£'000 £'000
£'000
Within one year:
Bank finance - 1,371 -
Leases 803 498 779
803 1,869 779
After one year and within five years:
Bank finance 19,000 1,029 4,000
Leases 5,476 1,065 6,656
24,476 2,094 10,656
After more than five years:
Leases 827 871 -
Total borrowings 26,106 4,834 11,435
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 a further accordion option of an additional £10m (at the
discretion of HSBC), and with repayment date of November 2024 extendable for
two further years. The revolving facility is available for general use. The
facility has covenants relating to leverage (net debt to EBITDA) and interest
coverage. At 31 October 2022, the Group had £1m of headroom within its £20m
committed loan facility with HSBC. On 30 November 2022, the Group reached
agreement with HSBC to exercise £5m of the accordion option, which increased
the committed loan facility from £20m to £25m, hence increasing the
available head room to £6m. The balance of the accordion option (£5m)
remains available to the Group (at the discretion of HSBC) for future
exercise.
7. Acquisitions
On 29 July 2022, the Group acquired 100% of the share capital of LTE
Scientific Systems Limited ("LTE"), for a total consideration of £5.5m, which
included freehold ownership of its manufacturing facility, valued at
approximately £1.7m. LTE specialises in the design, manufacture and servicing
of sterilizers, decontamination and thermal processing equipment, used in the
life science and medical market sectors. For the year ended 31 December 2021,
LTE achieved revenues of £6.4m and profit before tax of £0.4m. The
acquisition is expected to be earnings enhancing in the current financial
year.
On 21 October 2022, the Group acquired 100% of the share capital of Fraser
Anti-Static Techniques Limited ("Fraser"), for a total consideration of
£16.9m, of which £15.4m was paid before the period end and £1.5m is due to
be paid over the second half of the financial year. Approximately £1.0m of
the deferred consideration is based on net assets delivered at completion. The
total consideration includes freehold ownership of three of Fraser's
manufacturing sites, valued at approximately £1.8m. Fraser is a leading UK
manufacturer of anti-static products which eliminate, clean, generate or
measure static electricity in a variety of industries including plastics,
packaging, printing, food processing, medical and pharma amongst others. For
the year ended 30 November 2021, Fraser achieved revenues of £7.4m and profit
before tax of £1.9m. The acquisition is expected to be earnings enhancing in
the current financial year.
During the previous financial year, the Group completed the acquisition of
Safelab Systems for which contingent consideration of £2.4m was outstanding
at 30 April 2022. This amount was settled in cash in the current period.
8. Taxation
The Group has estimated an effective tax rate of 20% for the year and has
applied this rate to the profit before tax for the period. A gain of £117k
(H1 FY22: £295k) resulting from changes to the estimate of future tax relief
from share option exercises, including the estimated effect of changes in the
tax rate, has been booked directly to equity.
SDl Group plc
Beacon House
Nuffield Road
Cambridge
CB4 1TF
UK
Telephone: +44 (0)1223 727144
Fax: +44 (0)1223 727101
Email: info@sdigroup.com
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