TIDMSDI
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 GBP32.2m (H1 FY23: GBP31.7m)
-- Organic revenue growth of 2.2%, excluding GBP6.4m COVID
related sales in H1 FY23. 20% revenue growth from acquisitions
-- Adjusted operating profit* for the period decreased to GBP4.4m ( H1 FY23 : GBP6.9m)
o Reported operating profit decreased to GBP3.4m ( H1 FY23 :
GBP5.6m)
-- Adjusted profit before tax* decreased to GBP3.7m ( H1 FY23: GBP6.5m)
o Reported profit before tax decreased to GBP2.7m ( H1 FY23:
GBP5.3m)
-- 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 GBP3.3m (H1 FY23: GBP1.9m)
-- Net debt (debt less cash) of GBP13.2m at 31 Oct 23 (30 Apr
23: GBP13.3m, 31 Oct 22: GBP15.4m). Facility headroom of GBP10.25m
+ GBP5m 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
GBP32.2 million (H1 FY23: GBP31.7m), despite the expiry of the very
large profitable COVID contracts for cameras. Cash generated by
operations was GBP3.3m (H1 FY23: GBP1.9m). 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 GBP7.9m and
GBP8.4m.
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 GBP6.4m 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
GBP2.3m 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 GBP32.2m (H1 FY23:
GBP31.7m). The increase was driven by 20% acquisition growth
compared to the first half of FY23, with both LTE and FAST, who
delivered in total GBP6.3m 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 GBP6.4m 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 GBP26.8m (H1
FY23: GBP19.2m), with organic growth of 6.7%. On a reported basis,
sales in our Digital Imaging segment reduced by 57% to GBP5.4m (H1
FY23: GBP12.5m). 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 GBP1.0m (H1 FY23:
GBP1.2m).
Adjusted Group profit before tax decreased to GBP3.7m (H1 FY23:
GBP6.5m) as a result of the end of the COVID related contract in
FY23. Statutory Group profit before tax decreased to GBP2.7m (H1
FY23: GBP5.3m).
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 GBP3.3m (H1 FY23:
GBP1.9m). Working capital increased by GBP2.3m over the period due
to a GBP2.7m reduction in customer advances, GBP1.4m of which was
due to SVS shipping equipment in October. Astles Control Systems
saw its customer advances reduce by GBP0.6m as it delivered
chemical dosing equipment and LTE reduced by GBP0.5m as it worked
on an environmental test chambers project for a major OEM.
GBP1.0m 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 GBP13.2m at 31 October
2023 compared to GBP13.3m at 30 April 2023 and GBP15.4m 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 GBP10.25m of headroom within its GBP25m committed loan
facility with HSBC. A GBP5m 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.GBP2.6m. On the date of the acquisition, the Peak Sensors group
of companies had an improved cash in hand position of c.GBP0.2m.
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
GBP32.2m (H1 FY23: GBP31.7m), despite the expiry of the very large
profitable COVID contracts for cameras. Cash generated by
operations was GBP3.3m (H1 FY23: GBP1.9m). 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 GBP7.9m and
GBP8.4m.
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 6 months 12 months
to to to
31 October 31 October 30 April
2023 2022 2023
Note Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 6 months to 12 months to
to 31 October 30 April
31 October 2022 2023
2023 Unaudited Audited
Unaudited GBP'000 GBP'000
GBP'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
6 months 6 months 12 months
to to to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'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
6 months 6 months 12 months
to to to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
Note GBP'000 GBP'000 GBP'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 Non-controlling
31 October Merger Share-based interest
2023 - Share Merger relief Foreign Share payment Retained GBP'000
unaudited capital reserve reserve exchange premium reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 2,606 424 177 10,778 757 27,651 47 43,481
--------------- -------- -------- --------- --------- -------- ------------ --------- ---------------- ---------
6 months to Non-controlling
31 October Merger Share-based interest
2022 - Share Merger relief Foreign Share payment Retained GBP'000
unaudited capital reserve reserve exchange premium reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 Non-controlling
to 30 April Merger Share-based interest
2023 - audited Share Merger relief Foreign Share payment Retained GBP'000
capital reserve reserve exchange premium reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 (GBP),
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 6 months 12 months
to to to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 6 months 12 months
to to to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 6 months 12 months
to to to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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 6 months 12 months
to to to
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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
GBP'000 GBP'000 GBP'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.
Weighted Earnings
Profit average per share
for the period number of amount in
GBP'000 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
31 October 31 October 30 April
2023 2022 2023
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'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 GBP20m, with an
accordion option of an additional GBP10m 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
GBP5m of an available GBP10m accordion option, which increased the
committed loan facility from GBP20m to GBP25m. The balance of the
accordion option (GBP5m) 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.GBP1.6m in cash plus
further expected payments up to c.GBP1.0m 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 GBP2.1m, EBIT of
c.GBP0.3m, and the Peak group's statutory profit before tax was
c.GBP0.4m (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 GBP781,000 to GBP781,000 and the amounts
owed after one year and within five years has decreased by
GBP781,000 to GBP5,215,000. 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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END
IR UPGMGPUPWPUQ
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