REG - SDI Group PLC - Interim Results
07/12/2023 07:00
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RNS Number : 9521V SDI Group PLC 07 December 2023
SDI Group plc
("SDI", the "Company", or the "Group")
Interim results for the six months ended 31 October 2023
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 its results for the six months to
31 October 2023.
Financial and Operational Highlights
· Revenue increased by 1.6% to £32.2m (H1 FY23: £31.7m)
· Organic revenue growth of 2.2%, excluding £6.4m COVID related
sales in H1 FY23. 20% revenue growth from acquisitions
· Adjusted operating profit* for the period decreased to £4.4m (H1
FY23: £6.9m)
o Reported operating profit decreased to £3.4m (H1 FY23: £5.6m)
· Adjusted profit before tax* decreased to £3.7m (H1 FY23: £6.5m)
o Reported profit before tax decreased to £2.7m (H1 FY23: £5.3m)
· Adjusted diluted EPS* decreased to 2.68p (H1 FY23: 5.02p)
o Reported diluted EPS decreased to 1.89p (H1 FY23: 4.06p)
· Cash generated by operations increased to £3.3m (H1 FY23:
£1.9m)
· Net debt (debt less cash) of £13.2m at 31 Oct 23 (30 Apr 23:
£13.3m, 31 Oct 22: £15.4m). Facility headroom of £10.25m + £5m accordion
· New acquisition added to the Group post period end - Peak Sensors
A copy of the shareholder presentation regarding the financial results will be
made available on the Company's website
www.sdigroup.com/investors/reports-presentations/ later today.
Ken Ford, Chairman of SDI Group, said:
"In the first half of the financial year revenues increased to £32.2 million
(H1 FY23: £31.7m), despite the expiry of the very large profitable COVID
contracts for cameras. Cash generated by operations was £3.3m (H1 FY23:
£1.9m). Profits have been affected by some destocking, some of which is
likely to be temporary, alongside a slowdown in China and Germany. We now
expect to report FY24 adjusted profit before tax of between £7.9m and £8.4m.
For over ten years SDI has consistently grown value by focusing on a clear and
straightforward strategy. We acquire private companies at a significant
discount to those on the quoted markets. These subsidiaries are then
encouraged to grow for the benefit of all stakeholders. I am pleased to report
that we have a number of new acquisition opportunities under review. So,
despite the recent headwinds we look forward to the future with great
confidence."
* before share based payments, acquisition costs and amortisation of acquired
intangible assets.
** excluding £6.4m COVID related revenues in H1 FY23, to aid comparability.
Enquiries
SDI Group
plc
01223 727144
Ken Ford, Chairman
Mike Creedon, CEO
Ami Sharma, CFO
www.sdigroup.com
Cavendish Capital Markets Limited
020 7220 0500
Ed Frisby/Seamus Fricker - Corporate Finance
Andrew Burdis/Sunila de Silva - ECM
SDI designs and manufactures scientific and technology products for use in
digital imaging and sensing and control applications including life sciences,
healthcare, astronomy, plastics and packaging, manufacturing, precision
optics, measurement instrumentation and art conservation. SDI operates
through its companies: Atik Cameras, Synoptics, Graticules Optics, Sentek,
Astles Control Systems, Applied Thermal Control, MPB Industries, Chell
Instruments, Monmouth Scientific, Uniform Engineering, Safelab Systems,
Scientific Vacuum Systems Limited, LTE Scientific, Fraser Anti-Static
Techniques and Peak Sensors.
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.
The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.
Chairman's statement
Whilst the pandemic has ended, the changes in customer behaviour the pandemic
caused have continued into this financial year. The COVID years saw
over-ordering of products, partly driven by and also leading to component
shortages throughout the supply chain. SDI has both benefitted and suffered
from these customer behaviours over the last three years, however, this
over-ordering has now led to some OEM's de-stocking as they rebalance to a
more normalised economic environment. This has impacted upon a small number of
our businesses, but we consider this a short-term phenomenon. The strength of
our business model, with a number of smaller niche autonomous businesses
operating in a multitude of markets, gives us the ability to respond quickly
to such market movements. We will continue to control our costs carefully as
we manage through this stage of the economic cycle.
We acquired Peak Sensors after the period end on 3 November 2023. Peak is a UK
manufacturer of temperature sensors, specialising in standard and bespoke
thermocouples and resistance thermometers. With over 25 years of experience,
Peak serves various industries, including glass, ceramic, incinerators
(including energy from waste), cement, and ovens. Peak exports to more than 85
countries in 6 continents, with approximately 17% overseas sales.
Peak fits perfectly within our acquisition criteria and has joined our Sensors
and Control segment. It will be operated separately from our existing
businesses. We warmly welcome our new colleagues to the SDI Group.
Board
We are pleased to welcome Stephen Brown to the Board. Stephen joined SDI as
Chief Operating Officer at the end of September. His skills and experience, at
AB Dynamics, BP, Rolls Royce and high growth companies will be invaluable to
SDI. Alongside the addition of Louise Early and Andrew Hosty over FY23, the
Board has a strong blend of skills and experience to guide the Group as we
continue to grow through our buy and build strategy.
Trading and operations
The Group's trading has been mixed over the first half of FY24. Applied
Thermal Control have continued to see good demand in the chiller product
market. Astles Control Systems delivered a number of chemical dosing equipment
contracts and LTE Scientific ('LTE') continued to execute on a large
environmental test chambers contract. Scientific Vacuum Systems ('SVS') has
just received a £2.3m order from a different OEM customer for two high tech
pieces of equipment for design and delivery over the next 18 month. As
expected at the time of its acquisition, SVS is proving to be a 'lumpy' order
(and revenues) business. As a result of the events in Ukraine, its major OEM
customer has had to re-schedule it's planned order profile, leading to a delay
in placement of its next order for its next sputtering machine. Their pipeline
remains strong but timing of order placement can be variable.
Monmouth has seen an increase in enquiries and orders for clean rooms.
Safelab continues to see a good market for fume cupboards and Synoptics is
progressing well with its colony counter product brand, Synbiosis. However,
a number of OEMs in the life and bio sciences sector are finding the trading
environment tough, leading to short-term de-stocking. This is particularly the
case in the gel-doc market and this has significantly impacted upon Atik
Cameras and, to a much lesser degree, Synoptics. Fraser Anti-Static Techniques
('FAST') has seen a slowdown in some of its geographic markets which has had a
slight impact on the business.
The SDI businesses that focus on the laboratory products market have increased
collaboration over the period with increased contact between the different
management teams. The businesses are actively seeking and finding areas of
co-operation to reduce costs and enhance their total customer offer. A number
of SDI laboratory products businesses attended the UK Lab Innovations trade
show (some businesses for the first time) and a number are planning to have a
single stall at the 2024 fair. Anecdotally, footfall is now increasing across
these types of events and trade shows do provide a good source for sales
leads. We do sometimes travel further afield for trade fairs, with Atik
Cameras having attended Analytica China this year.
Marketing teams from across the Group met again recently to share best
practice; subject matter included digital marketing. It is expected that this
forum will continue to meet. SDI management attended a Group conference in
November 2023 to discuss our strategic plans. This provided a valuable forum
for networking and sharing business knowledge and opportunities.
We continue to invest. Safelab Systems implemented a new ERP system over the
last six months, going live in October 2023. This new system should provide a
platform for the business to grow. SDI Group is implementing a new financial
consolidation system, which will aid efficiency when consolidating the Group's
financial results and provide scalability as we add new businesses.
Revenues
Group revenues increased by 1.6% to £32.2m (H1 FY23: £31.7m). The increase
was driven by 20% acquisition growth compared to the first half of FY23, with
both LTE and FAST, who delivered in total £6.3m in non-organic sales (until
the anniversary of the acquisition). Both LTE and FAST are currently trading
ahead of expectations, and we are pleased with their progress.
Organic revenue growth across the business was 2.2% after excluding the
comparative £6.4m H1 FY23 COVID related revenues. On a reported basis, there
was an organic decline of 18.4%.
Sales in Sensors & Control were 40% higher at £26.8m (H1 FY23: £19.2m),
with organic growth of 6.7%. On a reported basis, sales in our Digital Imaging
segment reduced by 57% to £5.4m (H1 FY23: £12.5m). The Digital Imaging
segment sales reduced by 12.1%**(H1 FY24 vs H1 FY23) as a result of the
destocking noted above.
The previous financial year was characterised by component shortages and these
have eased considerably. This helped Astles Control Systems deliver more
chemical dosing equipment sales in comparison to the first half of last year.
Applied Thermal Control had a good trading period with the demand for
scientific and industrial cooling systems continuing to be strong. SVS had a
strong first half as they shipped a sputtering machine to a large OEM
customer. Monmouth Scientific has a strong order book and a good sales
pipeline but has experienced operational delays in delivering product to its
customers. This should ease over the second half.
As noted earlier, Atik Cameras' major gel-doc OEM customer has de-stocked
significantly over the first half of FY24. This has meant Atik's revenues have
fallen short of expectations. Encouragingly, Atik recently received an
18-month order from this customer which will underpin future demand but this
will not recover lost first half revenues. Notably, Atik received its first
order for ChemiMos cameras over the period.
Profits
Gross margins held up well in the first half of FY24 at 63%, flat compared to
the comparative period. Overheads were higher than the comparative period
mainly due to acquisitions. Excluding this, wages/overhead growth was modest.
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 £1.0m
(H1 FY23: £1.2m).
Adjusted Group profit before tax decreased to £3.7m (H1 FY23: £6.5m) as a
result of the end of the COVID related contract in FY23. Statutory Group
profit before tax decreased to £2.7m (H1 FY23: £5.3m).
Our effective tax rate has increased to 24.9% (on statutory PBT) (H1 FY23:
20%) with the growth coming from an increased corporation tax rate.
Basic earnings per share reduced to 1.92p (H1 FY23: 4.15p); diluted earnings
per share decreased to 1.89p (H1 FY23: 4.06p). Adjusted diluted earnings per
share reduced to 2.68p (H1 FY23: 5.02p).
Cash flow
Cash generated from operations increased to £3.3m (H1 FY23: £1.9m). Working
capital increased by £2.3m over the period due to a £2.7m reduction in
customer advances, £1.4m of which was due to SVS shipping equipment in
October. Astles Control Systems saw its customer advances reduce by £0.6m 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.
£1.0m in deferred consideration relating to the acquisition of Scientific
Vacuum Systems Limited will be paid in the second half of the year.
Net debt, or bank debt less cash, was £13.2m at 31 October 2023 compared to
£13.3m at 30 April 2023 and £15.4m at 31 October 2022. This represents a
net debt: EBITDA ratio of 1.1x (rolling last 12 months calculation basis). At
31 October 2023, the Group had £10.25m of headroom within its £25m committed
loan facility with HSBC. A £5m accordion option remains available to the
Group (at the discretion of HSBC) for future exercise.
The Group has sufficient access to funds, alongside its cash flow, to acquire
new companies and invest in our current portfolio of businesses.
Acquisitions
On 3 November 2023, the Group acquired 100% of the share capital of Peak
Sensors (Holding) Limited for a total consideration of c.£2.6m. On the date
of the acquisition, the Peak Sensors group of companies had an improved cash
in hand position of c.£0.2m. Peak Sensors Limited, the only trading entity in
the acquired group, operates from a single site in Chesterfield and has 14
employees.
Outlook
In the first half of the financial year revenues increased to £32.2m (H1
FY23: £31.7m), despite the expiry of the very large profitable COVID
contracts for cameras. Cash generated by operations was £3.3m (H1 FY23:
£1.9m). Profits have been affected by some destocking, some of which is
likely to be temporary, alongside a slowdown in China and Germany. We now
expect to report FY24 adjusted profit before tax of between £7.9m and £8.4m.
For over ten years SDI has consistently grown value by focusing on a clear and
straightforward strategy. We acquire private companies at a significant
discount to those on the quoted markets. These subsidiaries are then
encouraged to grow for the benefit of all stakeholders. I am pleased to report
that we have a number of new acquisition opportunities under review. So,
despite the recent headwinds we look forward to the future with great
confidence.
Ken Ford, Chairman
7 December 2023
Consolidated income statement
Unaudited for the six months ended 31 October 2023
6 months to 6 months to 12 months to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
Note £'000 £'000
£'000
Revenue 32,215 31,720 67,577
Costs of sales (11,908) (11,764) (24,810)
Gross Profit 20,307 19,956 42,767
Other operating income 59 50 112
Exceptional items - Goodwill impairment
- - (3,520)
Other operating expenses (16,957) (14,383) (32,547)
Operating expenses (16,957) (14,383) (36,067)
Operating profit 3,409 5,623 6,812
Net financing expense (754) (318) (970)
Profit before taxation 2,655 5,305 5,842
Income tax charge 7 (662) (1,061) (1,939)
Profit for the period 1,993 4,244 3,903
Attributable to:
Equity holders of the parent company 1,978 4,244 3,871
Non-controlling interest 15 - 32
Profit for the period 1,993 4,244 3,903
Earnings per share 5
Basic earnings per share 1.92p 4.15p 3.80p
Diluted earnings per share 1.89p 4.06p 3.72p
Consolidated statement of comprehensive income
Unaudited for the six months ended 31 October 2023
6 months to 6 months to 12 months to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000
£'000
Profit for the period 1,993 4,244 3,903
Other comprehensive income
Items that will not subsequently be reclassified to profit and loss:
Remeasurement of net defined benefit liability - - 95
Items that will subsequently be reclassified to profit and loss:
Exchange differences on translating foreign operations (4) 170 142
Total comprehensive profit for the period
1,989 4,414 4,140
Attributable to:
Equity holders of the parent company 1,974 4,414 4,108
Non-controlling interest 15 - 32
Total comprehensive profit for the period
1,989 4,414 4,140
Consolidated balance sheet
Unaudited at 31 October 2023
Note 6 months to 6 months to 12 months to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000
£'000
Assets
Non-current assets
Intangible assets 40,584 47,264 41,350
Property, plant and equipment 14,630 15,015 14,688
Investments 24 - 24
Deferred tax asset 7 705 1,547 734
55,943 63,826 56,796
Current assets
Inventories 11,937 12,066 13,504
Trade and other receivables 10,086 11,566 11,980
Corporation tax asset 495 - -
Cash and cash equivalents 1,546 3,619 2,711
24,064 27,251 28,195
Total assets 80,007 91,077 84,991
Liabilities
Non-current liabilities
Borrowings 6 14,750 19,000 16,000
Lease liabilities 6 5,989 6,304 5,996
Deferred tax liability 7 5,162 5,795 5,336
25,901 31,099 27,332
Current liabilities
Trade and other payables 9,768 16,543 15,444
Provisions 77 88 67
Lease liabilities 6 780 802 745
Current tax payable - 1,889 111
10,625 19,322 16,367
Total liabilities 36,526 50,421 43,699
Net assets 43,481 40,656 41,292
Equity
Share capital 1,041 1,027 1,041
Merger reserve 2,606 2,606 2,606
Merger relief reserve 424 424 424
Share premium account 10,778 10,093 10,778
Share-based payment reserve 757 656 557
Foreign exchange reserve 177 209 181
Retained earnings 27,651 25,641 25,673
Total equity due to shareholders 43,434 40,656 41,260
Non-controlling interest 47 - 32
Net assets 43,481 40,656 41,292
Consolidated statement of cash flows
Unaudited for the six months ended 31 October 2023
Note 6 months to 6 months to 12 months to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000
£'000
Operating activities
Net profit for the period 1,993 4,244 3,903
Depreciation and amortisation 2,005 2,010 4,256
Finance costs and income 754 318 970
Impairment of intangibles - - 3,520
Changes in provisions 10 (75) (96)
Taxation expense in the income statement 662 1,061 1,939
Employee share-based payments 200 140 351
Operating cash flow before movement in working capital
5,624 7,698 14,843
Changes in inventories 1,567 (1,906) (2,929)
Changes in trade and other receivables 1,894 (1,070) 2,689
Changes in trade and other payables (5,770) (2,847) (3,730)
Cash generated from operations 3,315 1,875 10,873
Interest paid (754) (318) (970)
Income taxes paid (1,413) (691) (2,161)
Cash generated from operating activities 1,148 866 7,742
Cash flows from investing activities
Capital expenditure on fixed assets (556) (443) (1,085)
Sale of property plant and equipment 20 10 84
Expenditure on development and other intangibles (232) (183) (323)
Acquisition of subsidiaries, net of cash - (16,523) (21,056)
Net cash used in investing activities (768) (17,139) (22,380)
Cash flows from financing activities
Payments of lease liabilities (384) (386) (789)
Proceeds from bank borrowings - 15,000 15,000
Repayment of borrowings (1,250) - (3,000)
Issues of shares & proceeds from option exercises - - 892
Net cash (used in)/from financing activities (1,634) 14,614 12,103
Net decrease in cash and cash equivalents (1,254) (1,659) (2,535)
Cash and cash equivalents, beginning of period 2,711 5,106 5,106
Foreign currency movements on cash balances 89 172 140
Cash and cash equivalents, end of period 1,546 3,619 2,711
Consolidated statement of changes in equity
Unaudited for the six months ended 31 October 2023
6 months to 31 October 2023 - unaudited Share Merger Foreign Share Share-based payment reserve Retained Non-controlling interest
capital reserve Merger relief reserve exchange premium £'000 earnings £'000 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 May 2023 1,041 2,606 424 181 10,778 557 25,673 32 41,292
Shares issued - - - - - - - - -
Tax in respect to share options
- - - - - - - - -
Share based payments transfer
- - - - - - - - -
Share based payments - - - - - 200 - - 200
Transactions with owners
- - - - - 200 - - 200
Profit for the period - - - - - - 1,978 15 1,993
Foreign exchange on consolidation of subsidiaries
- - - (4) - - - - (4)
Total comprehensive income for the period
- - - (4) - - 1,978 15 1,989
Balance at 31 October 2023 1,041 2,606 177 10,778
424 757 27,651 47 43,481
6 months to 31 October 2022 - unaudited Share Merger Foreign Share Share-based payment reserve Retained Non-controlling interest
capital reserve Merger relief reserve exchange premium £'000 earnings £'000 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
Consolidated statement of changes in equity (continued)
Unaudited for the six months ended 31 October 2023
12 months to 30 April 2023 - audited Share Merger Foreign Share Share-based payment reserve Retained Non-controlling interest Total
capital reserve Merger relief reserve exchange premium £'000 earnings £'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
Shares issued 19 - - - 873 - - - 892
Tax in respect to share options
- - - - - - 117 - 117
Share based payments transfer
- - - - - (114) 114 - -
Share based payments - - - - - 351 - - 351
Transactions with owners
19 - - - 873 237 231 - 1,360
Profit for the year - - - - - - 3,871 32 3,903
Actuarial gain on defined benefit pension
- - - - - - 95 - 95
Foreign exchange on consolidation of subsidiaries
- - - 142 - - - - 142
Total comprehensive income
- - - 142 - - 3,966 32 4,140
Balance at 30 April 2023
1,041 2,606 424 181 10,778 557 25,673 32 41,292
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
2023 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 2023. 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 2023.
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 2023 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 2023 and for the six months ended 31 October 2022 has not been audited
or reviewed by the auditors pursuant to the Financial Reporting Council's
relevant guidance.
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
2023.
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
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000
£'000
Operating Profit (as reported) 3,409 5,623 6,812
Adjusting items (all costs):
Non-underlying items
Share based payments 200 140 351
Amortisation of acquired intangible assets 758 823 1,795
Exceptional items
Impairment of intangibles - - 3,520
Acquisition costs 62 267 331
Total adjusting items within Operating Profit 1,020 1,230 5,997
Adjusted Operating Profit 4,429 6,853 12,809
Adjusted Profit Before Tax is defined as follows:
6 months to 6 months to 12 months to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000
£'000
Profit Before Tax (as reported) 2,655 5,305 5,842
Adjusting items (as above) 1,020 1,230 5,997
Adjusted Profit Before Tax 3,675 6,535 11,839
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
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000
£'000
Profit for the Period (as reported) 1,993 4,244 3,903
Adjusting items (as above) 1,020 1,230 5,918*
Less: taxation on adjusting items calculated at the UK statutory rate
(190) (234) (369)
Adjusted profit for the period 2,823 5,240 9,452
Divided by diluted weighted average number of shares in issue (Note 6) 105,242,068 104,411,856 104,799,252
Adjusted Diluted EPS 2.68p 5.02p 9.02p
*impairment of intangible assets is net of tax
Net Operating Assets is defined as follows:
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000
£'000
Net Assets 43,481 40,656 41,292
Deferred tax asset (705) (1,547) (734)
Corporation tax asset (495) (569) -
Cash and cash equivalents (1,546) (3,619) (2,711)
Borrowings (current and non-current) 21,519 26,106 22,741
Deferred consideration 961 2,460 961
Deferred tax liability 5,162 5,795 5,336
Current tax payable - 1,889 111
Total adjusting items within Net Assets 24,896 30,515 25,704
Net Operating Assets 68,377 71,171 66,996
4. Segmental analysis
6 months to 6 months to 12 months to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenues
Digital Imaging 5,405 12,529 20,870
Sensors & Control 26,810 19,191 46,707
Group 32,215 31,720 67,577
Adjusted operating profit
Digital Imaging 645 4,692 6,873
Sensors & Control 4,780 2,914 8,045
Other (996) (753) (2,109)
Group 4,429 6,853 12,809
Amortisation of acquired intangible assets
Digital Imaging (92) (92) (175)
Sensors & Control (666) (735) (1,620)
Group (758) (827) (1,795)
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
2023 2022 2023
Unaudited Unaudited Audited
£'000 £'000 £'000
Operating Assets excluding acquired intangible assets
Digital Imaging 7,452 8,191 7,585
Sensors & Control 28,875 29,868 32,155
Other 1,013 676 1,075
Group 37,340 38,735 40,815
Acquired intangible assets
Digital Imaging 4,759 4,932 4,844
Sensors & Control 35,141 41,675 35,888
Group 39,900 46,607 40,732
Operating Liabilities
Digital Imaging (1,298) (3,133) (1,489)
Sensors & Control (7,062) (10,383) (11,024)
Other (503) (655) (2,038)
Group (8,863) (14,171) (14,551)
Net Operating Assets
Digital Imaging 10,913 9,990 10,940
Sensors & Control 56,954 61,160 57,019
Other 510 21 (963)
Group 68,377 71,171 66,996
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
for the period average per share
£'000 number of amount in
shares
pence
Basic earnings per share:
Period ended 31 October 2023 1,993 104,050,044 1.92
Period ended 31 October 2022 4,244 102,215,980 4.15
Year ended 30 April 2023 3,903 102,761,812 3.80
Dilutive effect of share options:
Period ended 31 October 2023 1,192,024
Period ended 31 October 2022 2,195,876
Year ended 30 April 2023 2,037,440
Diluted earnings per share:
Period ended 31 October 2023 1,993 105,242,068 1.89
Period ended 31 October 2022 4,244 104,411,856 4.06
Year ended 30 April 2023 3,903 104,799,252 3.72
6. Borrowings
*Restated 30 April
31 October 31 October 2023
2023 2022 Audited
Unaudited Unaudited
£'000
£'000 £'000
Within one year:
Leases 780 802 745
780 802 745
After one year and within five years:
Bank finance 14,750 19,000 16,000
Leases 5,208 5,476 5,215
19,958 24,476 21,215
After more than five years:
Leases 781 828 781
Total borrowings 21,519 26,106 22,741
*see note 9
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 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. On 29
March 2023 the termination date was extended by a further year to 1 November
2025. This is extendable by another year at HSBC's discretion. The revolving
facility is available for general use. The facility has covenants relating to
leverage (net debt to EBITDA) and interest cover.
7. Taxation
The Group has estimated an effective tax rate of 24.9% (H1 FY23: 20%) for the
year and has applied this rate to the profit before tax for the period.
8. Post balance sheet events
On 3 November 2023 the Group completed the acquisition of Peak Sensors for an
initial consideration of c.£1.6m in cash plus further expected payments up to
c.£1.0m depending on net assets delivered at completion. Peak Sensors
comprises three companies: Peak Sensors (Holding) Limited and two wholly owned
subsidiaries, Peak Sensors Limited and Peak Sensors (Property) Limited. Peak
Sensors Limited is the main trading company employing all members of staff.
Peak Sensors is a leading UK manufacturer of temperature sensors, specialising
in standard and bespoke thermocouples and resistance thermometers which are
used in various industries, including glass, ceramic, incinerators (including
energy from waste), cement, and ovens. For the year ended 31 March 2023, Peak
Sensors achieved revenues of approximately £2.1m, EBIT of c.£0.3m, and the
Peak group's statutory profit before tax was c.£0.4m (consolidated,
unaudited).
The acquisition is expected to be earnings enhancing in the first full year of
ownership.
9. Prior year restatement
The amounts owed after more than five years and after one year and within five
years were updated to include the correct split. As a result of this
correction, the amounts owed after more than five years has increased by
£781,000 to £781,000 and the amounts owed after one year and within five
years has decreased by £781,000 to £5,215,000. The correction had no impact
on the presentation of current and non-current liabilities as per the
Statement of Financial Position.
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