REG - SDI Group PLC - Interim Results
05/12/2024 07:00
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RNS Number : 8768O SDI Group PLC 05 December 2024
SDI Group plc
("SDI", the "Company", or the "Group")
Interim results for the six months ended 31 October 2024
Refined strategy progressing, improved cash generation and order intake
5 December 2024 - SDI Group plc (https://sdigroup.com/) , the buy and build
group, focused on companies which design and manufacture specialist lab
equipment, industrial & scientific sensors and industrial & scientific
products, announces its interim results for the six months to 31 October 2024.
Operational and Strategic highlights
· Progress against the refined strategy articulated at the full
year results
· Value-enhancing acquisition of InspecVision Limited
· Continued focus on collaboration between the portfolio businesses
and driving synergies across the Group
· Strengthened senior management team in place to support delivery
of sustainable long-term growth
· Increased activity towards the end of the half, following the
previously reported slower start to the financial year. Positive momentum
continuing into H2 FY25
Financial summary
· Revenues of £30.9m (H1 FY24: £32.2m) reflecting reduced
activity in the life sciences and biomedical markets
· Gross margins (on materials only) improved to 65.4% (H1 FY24:
63.0%)
· Adjusted operating profit* of £3.9m (H1 FY24: £4.4m) and
reported operating profit of £2.4m (H1 FY24: £3.4m)
· Adjusted profit before tax* of £3.2m (H1 FY24: £3.7m) and
reported profit before tax of £1.7m (H1 FY24: £2.7m)
· Adjusted diluted EPS* of 2.37p (H1 FY24: 2.68p) and reported
diluted EPS of 1.18p (H1 FY24: 1.89p)
· Cash generated from operations increased to £4.7m (H1 FY24:
£3.3m)
Outlook
· Order intake significantly up on a like for like basis compared
to the second half of FY24
· Full year profits are expected to be in line with market
expectations** with increased second half weighting versus prior year
supported by an improved orderbook. Challenging conditions in the life
sciences and biomedical markets have impacted sales in the lab equipment
segment over the first half, leading to lower expected Group revenues for
FY25, which has been offset by improved gross margins and cost efficiencies
· Acquisition pipeline provides potential for further acquisitions
in FY25
· The Group is well placed for the future growth
Stephen Brown, Chief Executive Officer of SDI Group, said:
"Whilst conditions in the life sciences and biomedical markets were
challenging in early H1, we have seen improvements from September onwards. Our
diverse portfolio has delivered stronger performances in some other sectors.
The technological prowess and capabilities of the businesses within our
portfolio cannot be understated, and there remains a huge market opportunity
to further expand our community of entrepreneurial businesses.
To that end, we were pleased to complete the acquisition of InspecVision
Limited during the period and we continue to drive our active M&A pipeline
to expand our portfolio across key markets. We continue to target established
businesses in growth sector niches, whilst also delivering our strategy to
drive organic growth across our portfolio businesses."
A presentation for investors and shareholders via the Investor Meet Company
platform will be held today on Thursday, 5 December 2024 at 2.00 p.m. GMT.
Investors can register for the presentation via the following
link:https://www.investormeetcompany.com/sdi-group-plc/register-investor
(https://www.investormeetcompany.com/sdi-group-plc/register-investor)
A copy of the shareholder presentation will also 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 (in FY24) and amortisation of acquired
intangible assets.
** Analysts from SDI's 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 £70.45m, Adjusted Operating Profit of £10.0m
and Adjusted Profit Before Tax of £8.4m.
Enquiries
SDI Group plc
+44 (0)1223
727144
Stephen Brown, CEO
Ami Sharma, CFO
www.sdigroup.com
Cavendish Capital Markets Limited
+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 (mailto:SDIGroup@vigoconsulting.com)
About SDI Group plc
SDI Group plc is a group of small to medium size companies with specialist
industrial and scientific products in growth sector niches which help solve
customers' key challenges.
It specialises in the acquisition and development of companies that design and
manufacture specialist products for use in lab equipment, industrial &
scientific sensors and industrial & scientific products.
Its portfolio of businesses supplies the life sciences, healthcare, plastics
and packaging, manufacturing, precision optics and measurement instrumentation
markets.
SDI aims to continue its growth through driving the organic growth of its
portfolio companies and by the acquisition of complementary technology
businesses with established reputations in global markets.
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 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.
Chief Executive Officer's statement
A year into my tenure at SDI, the Group's future prospects are as strong as
ever. SDI has a range of high-quality businesses, many of which are in high
growth niche segments, and we are building towards a return to organic growth
alongside greater collaboration between the portfolio companies.
Simultaneously, as detailed in our refined strategy announced at the full year
results, we are seeking to drive inorganic growth through targeted
acquisitions.
Whilst the macroeconomic backdrop has remained challenging for a number of
businesses, particularly early in the financial year, the breadth of our
portfolio has ensured that whilst some businesses have experienced a temporary
slowdown in trading environments, that has been partially offset with stronger
performances in some other sectors.
As outlined at the year-end, we completed our strategic review in May and
prioritised two key areas to support our long-term growth objectives - growth
initiatives for the portfolio businesses (organic growth) and value-enhancing
acquisitions (inorganic growth).
Our organic growth strategy is underpinned by three pillars: 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,
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 strategic entry into new ones.
From an organic growth perspective, we have made progress in actively
fostering synergies between portfolio companies operating in overlapping
markets and/or offering similar products. The senior management at Safelab
Systems ('Safelab') and Monmouth Scientific ('Monmouth') have been combined,
and the two individual businesses are now working closely together.
Furthermore, businesses within the laboratory equipment segment are
increasingly engaging in white-label partnerships to secure larger contracts.
In October, six SDI businesses presented from a single stand at UK Lab
Innovations, the UK's leading laboratory industry trade show, with excellent
feedback from staff and visitors alike. We look forward to further leveraging
the strength of the entire portfolio and identifying further opportunities to
drive synergies and raise the profile of the Group.
During the period, regular events have been introduced to bring together the
leadership teams of all our portfolio businesses to foster greater
collaboration and share best practice, with the most recent leadership meeting
taking place at the end of November to reinforce strategy and ensure all
businesses remain on track.
In the first half of the year, we resized two businesses within the portfolio,
restructuring Atik Cameras ('Atik') to normalise its cost base and, following
a decision to refocus its US sales strategy and route to market, closing
Synoptics' US office.
SDI continues to invest in research and development ('R&D') across the
Group to meet customer demand. R&D expenditure amounted to £0.9m in H1
FY25, with investments made at Chell Instruments (to produce new pressure
scanner products including the DAQ range expansion) and Applied Thermal
Controls (to produce a new range of chillers). Atik, Synoptics and LTE
Scientific have also launched new products as we continue to invest in product
development.
Acquisition
At the end of October, the Group announced the acquisition of 100% of the
share capital of InspecVision Limited, ("InspecVision"), a designer and
manufacturer of high-accuracy vision-based measurement systems for industrial
applications, for a net consideration of £6.1m. InspecVision is a
high-quality, profitable business, which fulfils our key investment criteria
of trading in a growth sector, with international exposure (particularly in
the US), a strong management team and broadening the Group's overall presence
into new applied markets.
InspecVision provides precision measurement machinery for smart manufacturing,
automated inspection and reverse engineering and offers the Group an entrance
into the high value metrology market and a global, blue chip customer base.
The acquisition also introduces new technological capabilities to the Group,
including AI and machine learning, alongside strong IP, which can be
leveraged.
Its strong US market presence also provides a platform to deliver additional
value to other Group portfolio companies, particularly through cross-selling
synergies and opening up new routes to market.
The gross consideration for the acquisition was £8.67m and consisted of
consideration payable immediately following completion of £8.17m with a
further £0.5m due post period end. The total consideration includes £0.2m of
acquired cash and £2.4m of loans to the acquired company by the sellers.
£0.75m of these loans were settled through the receipt of a cash payment. The
acquisition was funded from the Group's revolving credit facility with HSBC UK
Bank ('HSBC').
InspecVision products are sold in over 30 countries worldwide. It employs 14
people and is based in a 20,400 sq ft. site in Newtonabbey, Northern Ireland.
InspecVision joins our Industrial & Scientific Products segment and will
be operated separately from our existing businesses. We are excited by the
prospects for this acquisition and continue to pursue our acquisitive growth
strategy alongside our organic growth programme.
Financials and segment breakdown
Group revenues reduced by 4.0% to £30.9m (H1 FY24: £32.2m). The decrease was
largely attributable to a £2.2m reduction in sales in the Lab Equipment
segment. Organic revenue decline across the Group was 5.7%. The Group's like
for like order intake over the first half improved significantly over the
second half of the last financial year.
Revenues in Industrial & Scientific Products were 0.3% higher at £11.7m
(H1 FY24: £11.6m). Atik Cameras had a strong first half with excellent
order intake and profit growth, after a full period of trading with its
largest OEM customer. Scientific Vacuum Systems ('SVS') saw a lower first half
than last year due to the comparative period including the delivery of a
sputtering system. SVS continues to execute on two large projects, so its
revenues will be more evenly split this financial year. Fraser Anti-Static
Techniques saw strong year on year revenue growth as its geographic markets
started to recover. Graticules Optics delivered a strong first half with
increased demand for its reticles and TEM grid products.
Sales in Industrial & Scientific Sensors increased by 10.7% to £8.4m (H1
FY24: £7.6m). On an organic basis, revenues declined by 4.5% because of lower
product sales at Astles Control Systems. This was due to an expected post
COVID reduction in demand for its chemical dosing systems.
Laboratory Equipment revenues reduced by 16.5% to £10.9m (H1 FY24: £13.0m)
due to challenging trading conditions earlier in the year, which impacted all
the businesses in this segment. The closure of Synoptics' US office, Synoptics
Inc., resulted in some restructuring charges. The organic reduction was 12.0%
after excluding the FY24 divestment of Uniform Engineering and closure of
Synoptics Inc. Safelab encountered customer driven delays on executing a large
fume cupboard order which has pushed revenues into the second half. Safelab's
order book remains robust. Monmouth's order intake has started to improve over
recent months, and its performance is expected to improve further over the
second half of the year.
Profits
Gross margins (on materials only) improved to 65.4% (H1 FY24: 63.0%), which
was encouraging, as the Group sought to pass on cost increases and maintain
margin discipline. Overheads and wages growth was in line with inflation when
excluding acquisitions and disposals/closures.
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. These adjustments totalled £1.5m (H1 FY24: £1.0m).
Adjusted Group profit before tax decreased to £3.2m (H1 FY24: £3.7m).
Statutory Group profit before tax decreased to £1.7m (H1 FY24: £2.7m).
Our effective tax rate has increased to 26.8% (on statutory PBT) (H1 FY24:
24.9%) following the changes to the R&D credit regime this financial year.
Basic earnings per share reduced to 1.19p (H1 FY24: 1.92p); diluted earnings
per share decreased to 1.18p (H1 FY24: 1.89p). Adjusted diluted earnings per
share reduced to 2.37p (H1 FY24: 2.68p).
Cash flow
Cash generated from operations increased to £4.7m (H1 FY24: £3.3m) which was
a pleasing performance. Working capital was flat over the period due to a
£2.1m reduction in trade and other receivables offset by a £1.7m reduction
in trade and other payables. Inventories increased by £0.4m over the half.
Customer advances were £2.0m at the period end (H1 FY24: £2.2m).
The InspecVision acquisition costs were £6.4m total cash consideration, with
£750k in loans repaid immediately following the close of the transaction.
This represents a net cash outflow of £5.6m.
Net debt, or bank debt less cash, increased to £17.1m at 31 October 2024
compared to £13.2m at 30 April 2024 and 31 October 2023, following the
acquisition of InspecVision just prior to the period end, which added £5.7m
in additional borrowings. This represents a net debt: EBITDA ratio of 1.43x
(rolling last 12 months calculation basis). At 31 October 2024, the Group had
£6.7m 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.
Outlook
Whilst conditions in the life sciences and biomedical markets (in particular)
were challenging in the early part of the financial year, we have seen most
markets improving as the year has progressed, with increased order intake
during the first half and increased sales later in the half. We remain on
track to meet market expectations* for profits, with an increased second half
weighting supported by an improved orderbook. The impact on sales in the lab
equipment segment over the first half has now led to lower expected Group
revenues for FY25, which has been offset by improved gross margins and cost
efficiencies.
There remains a huge market opportunity for the offering of our diverse but
complementary portfolio of businesses, particularly around enabling efficiency
and sustainability across science and industry. There is also a real
opportunity to further expand our community of entrepreneurial leaders that
sit within the businesses in our Group.
Alongside the focus on delivering our strategy to support organic growth
across our portfolio businesses, we continue to drive our inorganic strategy,
underpinned by a proven track record of delivering value-enhancing
acquisitions. These efforts combine to strengthen the SDI proposition and
deliver our long term growth objectives.
Stephen Brown, Chief Executive Officer
4 December 2024
* Analysts from SDI's 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 £70.45m, Adjusted Operating Profit of £10.0m
and Adjusted Profit Before Tax of £8.4m.
Consolidated income statement
Unaudited for the six months ended 31 October 2024
6 months to *Restated 6 months to 12 months to
31 October 31 October 30 April
2024 2023 2024
Unaudited Unaudited Audited
Note £'000 £'000
£'000
Revenue 30,911 32,215 65,846
Other income 150 59 104
Operating costs 5 (28,627) (28,865) (58,660)
Operating profit 2,434 3,409 7,290
Net financing expense (738) (754) (1,627)
Profit before taxation 1,696 2,655 5,663
Income tax charge 8 (454) (662) (1,409)
Profit for the period 1,242 1,993 4,254
Attributable to:
Equity holders of the parent company
1,214 1,978 4,231
Non-controlling interest 28 15 23
Profit for the period 1,242 1,993 4,254
Earnings per share 6
Basic earnings per share 1.19p 1.92p 4.09p
Diluted earnings per share 1.18p 1.89p 4.04p
*see note 5
Consolidated statement of comprehensive income
Unaudited at 31 October 2024
6 months to 6 months to 12 months to
31 October 31 October 30 April
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000
£'000
Profit for the period 1,242 1,993 4,254
Other comprehensive income
Items that will subsequently be reclassified to profit and loss:
Exchange differences on translating foreign operations
(81) (4) (38)
Total comprehensive profit for the period 1,161 1,989 4,216
Attributable to:
Equity holders of the parent company 1,133 1,974 4,193
Non-controlling interest 28 15 23
Total comprehensive profit for the period 1,161 1,989 4,216
Consolidated balance sheet
Unaudited at 31 October 2024
Note 31 October *Restated 30 April
2024 31 October 2024
Unaudited 2023 Audited
£'000 Unaudited
£'000
£'000
Assets
Non-current assets
Intangible assets 47,217 40,584 42,040
Property, plant and equipment 8,311 8,200 8,219
Right-of-use leased assets 6,342 6,430 6,488
Investments in associated undertakings - 24 -
Deferred tax asset 10 142 147 144
62,012 55,385 56,891
Current assets
Inventories 11,629 11,937 10,577
Trade and other receivables 11,205 10,086 12,677
Corporation tax asset 292 495 87
Cash and cash equivalents 1,195 1,546 1,430
24,321 24,064 24,771
Total assets 86,333 79,449 81,662
Non-current liabilities
Borrowings 7 (24,173) (20,739) (20,636)
Provisions (235) - (245)
Deferred tax liability 10 (5,595) (4,604) (4,841)
(30,003) (25,343) (25,722)
Current liabilities
Trade and other payables (8,584) (9,768) (9,647)
Provisions (53) (77) (22)
Borrowings 7 (953) (780) (841)
(9,590) (10,625) (10,510)
Total liabilities (39,593) (35,968) (36,232)
Net assets 46,740 43,481 45,430
Equity
Share capital 1,046 1,041 1,046
Merger reserve 2,606 2,606 2,606
Merger relief reserve 424 424 424
Share premium account 10,858 10,778 10,858
Share-based payment reserve 914 757 764
Foreign exchange reserve 61 177 143
Retained earnings 30,789 27,651 29,575
Total equity due to shareholders 46,698 43,434 45,416
Non-controlling interest 42 47 14
Total equity 46,740 43,481 45,430
*see note 10
Consolidated statement of cash flows
Unaudited for the six months ended 31 October 2024
Note 6 months to 6 months to 12 months to
31 October 31 October 30 April
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000
£'000
Operating activities
Profit for the year 1,242 1,993 4,254
Depreciation 1,017 1,007 2,021
Amortisation 1,030 998 1,963
Finance costs and income 738 754 1,627
Increase/(decrease) in provisions 21 10 (15)
Taxation in the income statement 454 662 1,409
Employee share-based payments 150 200 128
Operating cash flows before movement in working capital
4,652 5,624 11,387
(Increase)/decrease in inventories (414) 1,567 3,343
Decrease/(increase) in trade and other receivables 2,128 1,894 (92)
Decrease in trade and other payables (1,685) (5,770) (5,252)
Cash generated from operations 4,681 3,315 9,386
Interest paid (738) (754) (1,627)
Income taxes paid (912) (1,413) (1,925)
Cash generated from operating activities 3,031 1,148 5,834
Investing activities
Capital expenditure on fixed assets (589) (556) (966)
Sale of property, plant and equipment 50 20 144
Expenditure on development and other intangibles (321) (232) (820)
Payment of deferred consideration - - (961)
Proceeds from loan settlement 750 - -
Acquisition of subsidiaries, net of cash (6,393) - (2,386)
Net cash used in investing activities (6,503) (768) (4,989)
Financing activities
Finance leases repayments (357) (384) (796)
Dividends paid to non-controlling interests in subsidiaries
- - (41)
Proceeds from bank borrowing 6,925 - 3,700
Repayment of borrowings (3,250) (1,250) (5,100)
Issues of shares and proceeds from option exercise - - 85
Net cash from/(used in) financing 3,318 (1,634) (2,152)
Net changes in cash and cash equivalents (154) (1,254) (1,307)
Cash and cash equivalents, beginning of period 1,430 2,711 2,711
Foreign currency movements on cash balances (81) 89 26
Cash and cash equivalents, end of period 1,195 1,546 1,430
Consolidated statement of changes in equity
Unaudited for the six months ended 31 October 2024
6 months to 31 October 2024 - unaudited Share Merger Foreign Share Share-based payment reserve Retained Total equity due to shareholders Non-controlling interest
capital reserve Merger relief reserve exchange premium £'000 earnings £'000 £'000 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 April 2024 1,046 2,606 424 143 10,858 764 29,575 45,416 14 45,430
Share based payments - - - - - 150 - 150 - 150
Transactions with owners - - - - - 150 - 150 - 150
Profit for the period - - - - - - 1,214 1,214 28 1,242
Foreign exchange on consolidation of subsidiaries
- - - (82) - - - (82) - (82)
Total comprehensive income for the period
- - - (82) - - 1,214 1,132 28 1,160
Balance at 31 October 2024 1,046 2,606 61 10,858
424 914 30,789 46,698 42 46,740
6 months to 31 October 2023 - unaudited Share Merger Foreign Share Share-based payment reserve Retained Total equity due to shareholders Non-controlling interest
capital reserve Merger relief reserve exchange premium £'000 earnings £'000 £'000 Total
£'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
Share based payments - - - - - 200 - 200 - 200
Transactions with owners - - - - - 200 - 200 - 200
Profit for the period - - - - - - 1,978 1,978 15 1,993
Foreign exchange on consolidation of subsidiaries
- - - (4) - - - (4) - (4)
Total comprehensive income for the period
- - - (4) - - 1,978 1,974 15 1,989
Balance at 31 October 2023 1,041 2,606 177 10,778
424 757 27,651 43,434 47 43,481
Consolidated statement of changes in equity (continued)
Unaudited for the six months ended 31 October 2024
12 months to 30 April 2024 - audited Share Merger Foreign Share Share-based payment reserve Retained Total equity due to shareholders Non-controlling interest
capital reserve Merger relief reserve exchange premium £'000 earnings £'000 £'000 Total
£'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
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
2024 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 2024. 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 4 December 2024.
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 2024 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 2024 and for the six months ended 31 October 2023 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
2024.
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 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):
6 months to *Restated 6 months to 12 months to
31 October 31 October 30 April
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000 £'000
Revenue 30,911 32,215 65,846
Cost of purchases (10,699) (11,908) (24,297)
Gross Profit (on materials only) 20,212 20,307 41,549
Gross Margin (on materials only) 65.4% 63.0% 63.1%
*see note 5
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
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000
£'000
Operating Profit (as reported) 2,434 3,409 7,290
Adjusting items (all costs):
Non-underlying items
Share based payments 150 200 128
Amortisation of acquired intangible assets 796 758 1,558
Exceptional items
Reorganisation costs 265 - 447
Acquisition costs 249 62 155
Total adjusting items 1,460 1,020 2,288
Adjusted Operating Profit 3,894 4,429 9,578
Adjusted Profit Before Tax is defined as follows:
6 months to 6 months to 12 months to
31 October 31 October 30 April
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000
£'000
Profit Before Tax (as reported) 1,696 2,655 5,663
Adjusting items (as above) 1,460 1,020 2,288
Adjusted Profit Before Tax 3,156 3,675 7,951
Adjusted EPS is defined as follows:
6 months to 6 months to 12 months to
31 October 31 October 30 April
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000
£'000
Profit for the Period (as reported) 1,242 1,993 4,254
Adjusting items (as above) 1,460 1,020 2,288
Less: taxation on adjusting items calculated at the UK statutory rate
(199) (190) (462)
Adjusted profit for the period 2,503 2,823 6,080
Divided by diluted weighted average number of shares in issue (note 6) 105,586,140 105,242,068 105,253,543
Adjusted Diluted EPS 2.37p 2.68p 5.78p
Net Operating Assets is defined as follows:
31 October *Restated 31 October 30 April
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000
£'000
Net Assets 46,740 43,481 45,430
Deferred tax asset* (142) (147) (144)
Corporation tax asset (292) (495) (87)
Cash and cash equivalents (1,195) (1,546) (1,430)
Borrowings and lease liabilities (current and non-current)
25,126 21,519 21,477
Deferred & contingent consideration 500 961 -
Deferred tax liability* 5,595 4,604 4,841
Total adjusting items 29,592 24,896 24,657
Net Operating Assets 76,332 68,377 70,087
*see note 10
4. Segmental analysis
The previous segment structure, comprising Digital Imaging and Sensors and
Control, has been in place since 2019. After a strategic review during the
previous financial year, the Board considers this segment structure is no
longer appropriate and decided to create the following three segments with
effect from the start the current financial year: Lab Equipment, Industrial
& Scientific Sensors and Industrial & Scientific Products. 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.
6 months to Restated 6 months to Restated 12 months to
31 October 31 October 30 April
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000
£'000
Revenues
Lab Equipment 10,850 13,000 26,835
Industrial & Scientific Sensors 8,402 7,591 16,145
Industrial & Scientific Products 11,659 11,624 22,866
Group 30,911 32,215 65,846
Adjusted operating profit
Lab Equipment 782 1,411 3,103
Industrial & Scientific Sensors 1,832 2,038 4,319
Industrial & Scientific Products 2,310 1,976 3,986
Central costs (1,030) (996) (1,830)
Group 3,894 4,429 9,578
Amortisation of acquired intangible assets
Lab Equipment (193) (272) (388)
Industrial & Scientific Sensors (290) (257) (514)
Industrial & Scientific Products (313) (229) (656)
Group (796) (758) (1,558)
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.
4. Segmental analysis (continued)
31 October Restated 31 October Restated 30 April
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000
£'000
Operating Assets excluding acquired intangible assets
Lab Equipment 18,037 19,171 19,783
Industrial & Scientific Sensors 6,618 5,509 6,630
Industrial & Scientific Products 12,607 11,647 11,886
Central costs 1,497 1,013 827
Group 38,759 37,340 39,126
Acquired intangible assets
Lab Equipment 8,343 8,837 8,654
Industrial & Scientific Sensors 12,722 11,469 13,000
Industrial & Scientific Products 24,878 19,594 19,225
Group 45,943 39,900 40,879
Operating Liabilities
Lab Equipment (3,989) (4,256) (4,610)
Industrial & Scientific Sensors (2,277) (2,334) (2,339)
Industrial & Scientific Products (1,649) (1,770) (2,074)
Central costs (455) (503) (895)
Group (8,370) (8,863) (9,918)
Net Operating Assets
Lab Equipment 22,391 23,752 23,827
Industrial & Scientific Sensors 17,063 14,644 17,291
Industrial & Scientific Products 35,836 29,471 29,037
Central costs 1,042 510 (68)
Group 76,332 68,377 70,087
Net operating assets has been defined in note 3.
5 Operating costs
31 October *Restated 31 October 30 April
2024 2023 2024
Unaudited Unaudited Audited
£'000 £'000
£'000
Raw materials and consumables 10,699 11,908 24,297
Staff costs 12,040 11,907 23,184
Other administrative expenses 5,888 5,050 11,179
28,627 28,865 58,660
*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. This is a presentational adjustment only
and does not impact on reported profit before tax.
6. 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 2024 1,242 104,551,326 1.19
Period ended 31 October 2023 1,993 104,050,044 1.92
Year ended 30 April 2024 4,254 104,099,565 4.09
Dilutive effect of share options:
Period ended 31 October 2024 1,034,814
Period ended 31 October 2023 1,192,024
Year ended 30 April 2024 1,153,978
Diluted earnings per share:
Period ended 31 October 2024 1,242 105,586,140 1.18
Period ended 31 October 2023 1,993 105,242,068 1.89
Year ended 30 April 2024 4,254 105,253,543 4.04
7. Borrowings
31 October 31 October 2023 30 April
2024 Unaudited 2024
Unaudited £'000 Audited
£'000
£'000
Current liabilities:
Leases 953 780 841
953 780 841
Non-current liabilities:
Bank finance 18,275 14,750 14,600
Finance lease liabilities 5,898 5,989 6,036
24,173 20,739 20,636
Total borrowings 25,126 21,519 21,477
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 period to 31 October 2024 the Group had drawn
down £18.3m of its revolving credit facility, leaving £6.7m in headroom
(excluding the additional £5m accordion option).
8. Taxation
The Group has estimated an effective tax rate of 26.8% (H1 FY24: 24.9%) for
the year and has applied this rate to the profit before tax for the period.
9. Business combinations
On 29 October 2024, the Company acquired 100% of the share capital of
InspecVision Limited, a company incorporated in England and Wales, for a
consideration payable in cash.
The assets and liabilities acquired were as follows:
Fair Value
Book value adjustment Fair Value
£'000 £'000 £'000
Assets
Non-current assets
Intangible assets - 3,550 3,550
Property, plant & equipment 92 - 92
Total non-current assets 92 3,550 3,642
Current assets
Inventories 638 - 638
Trade and other receivables 3,004 - 3,004
Cash and cash equivalents 178 - 178
Liabilities
Trade and other payables (132) - (132)
Deferred tax liability (108) (888) (996)
Net assets acquired 3,672 2,662 6,334
Goodwill 2,337
Consideration and cost of investment 8,671
Fair value of consideration transferred
Cash paid 6,565
Less: cash acquired (172)
Net cash paid in year (see cash flow) 6,393
Non-cash item: Acquired receivable netted on consolidation against SDI loan
payable
1,606
Cash acquired 172
Deferred payment 500
8,671
A loan of £750k was repaid immediately post-acquisition taking the net cash
paid from £6,393k to £5,643k.
Due to the short period of time since acquisition, fair value adjustments are
provisional and will be finalised within twelve months of acquisition date.
InspecVision Limited was acquired on 29 October 2024 and therefore did not
contribute any revenue or profit to the Group in the first half of the year.
If the acquisition of InspecVision Limited had been completed on the first day
of the financial year, the additional impact on group revenues for the period
are estimated to have been £1.5m and the additional impact on group profit is
estimated to have been £343k (before exceptional items) or £466k (after
exceptional items), before an additional £0.2m of amortisation expense.
The goodwill of £2,337k arising from the acquisition relates to the assembled
workforce and to expected future profitability, synergy and growth
expectations.
The deferred tax liability has been calculated on the amortisable intangible
assets using the current enacted statutory tax rate of 25%.
10. Prior year restatement
In prior periods, 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 period ended 31 October 2023 have
decreased by £558k and previously reported provisions for liabilities and
charges and total liabilities have also decreased by £558k. The previously
reported net asset figures for the year ended 31 October 2023 is unchanged.
There has been no impact on previously reported profits in the period.
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