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SDI GROUP PLC Interim / Quarterly Report 2022
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Interim / Quarterly Report
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National Storage Mechanism | Additional information 
RNS Number : 7523U
SDI Group PLC
07 December 2021
SDI Group plc
("SDI", "SDI Group", the "Company", or the "Group")
Interim results for the six months ended 31 October 2021
SDI Group plc, the AIM quoted Group focused on the design and manufacture of scientific and technology products for use in digital imaging and sensing and control applications, is pleased to announce another strong set of results and solid operational progress for the six months to 31 October 2021.
Financial Highlights
· Revenue increased by 75% to £24.7m (FY21 H1: £14.1m), including 42% organic growth
o Continued strong contribution from Atik Cameras due to one-time COVID-19-related contracts, expected to complete by January 2022
o £4.6m sales contribution from Monmouth Scientific and Uniform Engineering, acquired in FY21 H2
o Organic sales growth in all other businesses averaged 22%
· Reported operating profit increased by 105% to £5.2m (FY21 H1: £2.5m)
o Adjusted operating profit* for the period increased by 82% to £5.8m (FY21 H1: £3.2m)
· Reported profit before tax increased by 115% to £5.1m (FY21 H1: £2.4m)
o Adjusted profit before tax* increased by 89% to £5.7m (FY21 H1: £3.0m)
· Reported diluted EPS increased by 76% to 3.43p (FY21 H1: 1.95p)
o Adjusted diluted EPS* increased 59% to 3.92p (FY21 H1: 2.47p)
· Cash generated from operations decreased by 6% to £4.4m (FY21 H1: £4.7m)
o Prior year included a substantial build-up of customer down payments related to the one-time COVID-19-related contracts
· Net cash** at 31 October 2021 of £1.1m (30 April 2021: £0.8m)
o Deferred consideration outstanding was £nil (30 April 2021: £2.35m)
* before reorganisation costs, acquisition costs, amortisation of acquired intangibles and share based payment costs
** cash and cash equivalents less bank finance
Operational Highlights
· Our FY21 acquisitions of Monmouth Scientific and Uniform Engineering have performed ahead of management's expectations and have been fully integrated into the Group
· On 1 November 2021, we renewed and expanded our committed loan facility with HSBC to £20m, with a further accordion option of an additional £10m (at the discretion of HSBC), which, with our current net cash position and strong cash flow, provides sufficient funding for acquisition opportunities
Ken Ford, Chairman of SDI Group, said:
"We are pleased to report yet another strong set of financial results. SDI Group continues to execute on its business model, investing in quality businesses that are able to grow while generating cash. We look forward to delivering a full year performance in line with market expectations1."
1 Analysts from our Broker finnCap Limited and from Progressive Equity Research regularly provide research on the Company, and the Group considers the average of their forecasts to represent market expectations for FY 2022 being Revenue of £45.05m and Adjusted2 Profit Before Tax of £9.2m
Enquiries
SDI Group plc 01223 320480
Ken Ford, Chairman
Mike Creedon, CEO
Jon Abell, CFO
www.thesdigroup.net
finnCap Ltd 020 7220 0500
Ed Frisby/Kate Bannatyne/Milesh Hindocha - Corporate Finance
Andrew Burdis/Sunila de Silva - ECM
JW Communications 07818 430877
Julia Wilson - Investor & Public Relations
About SDI Group plc:
SDI designs and manufactures scientific and technology products for use in digital imaging and sensing and control applications including life sciences, healthcare, astronomy, manufacturing, precision optics and art conservation. SDI operates through its company divisions: Atik Cameras, Synoptics, Graticules Optics, Sentek, Astles Control Systems, Applied Thermal Control, MPB Industries, Chell Instruments, Monmouth Scientific and Uniform Engineering.
SDI continues to grow by developing its own technology advancements and by improving its global sales channels, as well as through pursuing strategic, complementary acquisitions. www.thesdigroup.net
Chairman's statement
With the world having only partially adapted to the coronavirus pandemic, it is pleasing to be able to report a broad-based return to levels of activity that are higher than those we saw before it started. All, however, is not yet calm. The businesses are cogs in a machine that is trying to cope with changes in demand patterns caused by the pandemic, but also by longer term upheavals including a focus on healthcare, technological advancement, climate change and Brexit.
I am more convinced than ever that SDI's business model, involving smaller niche businesses operating with a high degree of autonomy in technical, scientific and medical and life science market segments, offers a route to sustained value creation, and allows us to respond rapidly to events.
Trading
Our larger OEM customers have been ordering at good levels for some time now, with strong demand in healthcare, beverage can production and automotive racing in particular. Interest from customers for new products to be designed in and for capital equipment purchases for general laboratory use has remained subdued, although the restarting of trade fairs and exhibitions suggests that this too will bounce back now. Service activity is still hampered by travel restrictions but has lately been improving.
Supply chain issues have become a drain on management time, and our businesses are having to work hard to source components, modify designs for missing ones, and also to adapt to customer demand changes. However, they are managing well.
The subsidiaries all worked hard to adapt to the changes in the half year, which was appreciated by the Board, and, I am sure, by shareholders.
Revenues
Group revenues increased by 75% to £24.7m (FY21 H1: £14.1m). The increase was driven by 3 major factors:
- Our Atik Cameras business continued to deliver, at a higher rate than in previous periods, cameras for use by a global OEM in RT PCR machines, which are (amongst other uses) the gold standard instrument for COVID-19 testing. We expect current orders, paid for in advance of shipment, to be fulfilled by January 2022, and we have no visibility of further orders.
- The businesses we acquired in FY21 H2, Monmouth Scientific and Uniform Engineering, delivered £4.6m of sales, which was ahead of our expectations.
- Our other businesses performed very well, recording collectively 22% sales growth compared with FY21 H1, which was of course affected by pandemic-related reductions in customer purchases. All of these businesses have rebounded substantially, with the exception of the ventilator-related sales at MPB industries.
Organic revenue growth across the business was 42%. Compared with the same period of two years ago, FY20 H1, sales of those businesses in the Group at the time have increased by 59%. Excluding the exceptional 218% growth at Atik Cameras, all of those businesses have grown, at an average two-year growth of 16%.
Sales in our Digital Imaging segment grew by 64% to £11.4m (FY21 H1: £6.9m) and sales in Sensors & Control were 85% higher at £13.3m (FY21 H1: £7.2m).
Profits
Gross margin was lower than in FY21 H1, due essentially to the evolution of product mix, including the effect of below-average margins at Monmouth Scientific (acquired in FY21 H2) and on the Atik Camera orders. We have had to increase prices to offset the impacts of both labour cost increases and component and raw material price increases across the Group, and generally we have seen customer acceptance of this.
Overheads are higher than the comparative period which benefited from furlough receipts and from a virtual stop to travel costs, but we are seeing the benefit of efficiency gains realised over the past year.
Group profit before tax increased by 115% to £5.1m (FY21 H1: 2.4m), driven by the organic revenue growth and the contribution of the FY21 H2 acquired businesses.
Our tax charge has increased by 288% to £1.5m (FY21 H1: £0.4m), essentially due to a £0.6m charge to align certain deferred tax assets and liabilities (except for deferred tax assets related to share options) to the new UK corporate tax rate of 25% from April 2023. A £0.3m favourable impact from aligning the deferred tax asset for future share option gains to current share prices and tax rates has been booked directly to equity.
In addition to the GAAP results, 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. Adjusted profit before tax increased by 90% to £5.7m (FY21 H1: £3.0m). Adjustments for the period were for the amortisation of acquired intangible assets and for share based payments totalling £0.6m (FY21 H1: £0.5m). No acquisition-related costs or reorganisation costs were recorded in the period (FY21 H1: £0.1m of reorganisation expense).
Basic earnings per share increased by 78% from 2.03p to 3.61p; diluted earnings per share increased by 76% to 3.43p (FY21 H1: 1.95p). Adjusted diluted EPS increased by 59% to 3.92p (FY21 H1: 2.47p).
Cash flow
Cash generated from operations reduced by 6% to £4.4m (FY21 H1: £4.7m). The very strong cash flow of the previous year was strongly influenced by the build-up of advanced payments for the COVID-19-related orders at Atik Cameras (as reported at the time). In the current period, these have reduced by about £1.1m, with consequent reduction to cash flow. The remaining £1.8m is expected to unwind in the remaining months of the year as the orders are shipped.
During this period, we paid the deferred consideration element of £2.35m on the acquisition of Monmouth Scientific.
Net cash, or cash less bank debt, increased to £1.1m at 31 October 2021 from £0.8m at 30 April 2021.
On 01 November 2021, directly following the period end, we renewed and expanded our committed loan facility with HSBC to £20m, with a further accordion option of an additional £10m (at the discretion of HSBC), which, with our current net cash position and strong cash flow, provides sufficient funding for acquisition opportunities. The new facility has been tailored to our business model with fewer restrictions on acquisitions and allows for higher leverage if necessary.
Operations
This half year has been a challenging one for our operations teams, with relatively short-term changes in customer demand, usually upwards but also impacted by customers' ability to source other key components, and with upstream shortages of our own components and materials. Significant management time has been expended in negotiating additional supplies and finding alternative sources or designing in substitute components. We expect this situation to endure for some time, and we have also increased purchases in many cases to secure key inputs.
Labour availability has been less of a problem, with generally low turnover as usual, but some vacancies taking time to fill.
We are seeing cost increases in both material and labour, but we are generally able to pass these on to customers.
As part of a rolling programme of upgrading facilities, we have been investing in an upgrade and capacity expansion at Graticules Optics to create a modern factory that is able to expand into new areas and have made further investments at Uniform Engineering for efficiency, capacity and quality. We have been strengthening the Portugal-based team at Atik Cameras so that they can directly handle all day-to-day interaction with the global customer-base, leaving Norwich as the centre of excellence for product development, marketing and new business.
Our business units have only recently started to attend and exhibit at trade fairs and exhibitions after a difficult period of demonstrating and marketing products via videoconference. Design-in activity with OEM customers is also picking up again, whereas research and development has continued throughout the pandemic period within our business units.
Acquisitions
No major acquisition took place in the period, but in August 2021, we purchased the Clean Tent trade and assets from Moorfield Technology, for a cash consideration of £150,000, which was integrated into Monmouth Scientific. Clean Tents are portable and temporary cleanroom facilities, which are complementary to the Monmouth Scientific range and we are very pleased with this purchase.
The Group continues to look for complementary acquisitions fitting our criteria, and we would hope to close at least one in the financial year.
Outlook
As we have previously disclosed, we expect sales and therefore profit in the second half of the year to be lower than in the first half, as the COVID-19-related orders at Atik have been mostly completed. Apart from this, we expect a continuation of favourable trading conditions seen in the first half and look forward to delivering a full year performance in line with market expectations.
Ken Ford, Chairman
6 December 2021
Consolidated income statement
Unaudited for the six months ended 31 October 2021
| Note | 6 months to 31 October 2021 Unaudited £'000 |
6 months to 31 October 2020 Unaudited £'000 |
12 months to 30 April 2021 Audited £'000 |
||||
| Revenue | 24,655 | 14,126 | 35,076 | ||||
| Costs of sales | (8,783) | (4,724) | (12,206) | ||||
| Gross Profit | 15,882 | 9,402 | 22,870 | ||||
| Other operating income | 20 | 7 | 21 | ||||
| Operating expenses | (10,695) | (6,874) | (16,960) | ||||
| Operating profit | 5,207 | 2,535 | 5,931 | ||||
| Net financing expense | (105) | (164) | (287) | ||||
| Profit before taxation | 5,102 | 2,371 | 5,644 | ||||
| Income tax charge | 8 | (1,526) | (393) | (936) | |||
| Profit for the period | 3,576 | 1,978 | 4,708 | ||||
| Earnings per share | 5 | ||||||
| Basic earnings per share | 3.61p | 2.03p | 4,81p | ||||
| Diluted earnings per share | 3.43p | 1.95p | 4.58p |
Consolidated statement of comprehensive income
Unaudited for the six months ended 31 October 2021
| 6 months to 31 October 2021 Unaudited £'000 |
6 months to 31 October 2020 Unaudited £'000 |
12 months to 30 April 2021 Audited £'000 |
||
| Profit for the period | 3,576 | 1,978 | 4,708 | |
| Other comprehensive income | ||||
| Exchange differences on translating foreign operations | (161) | 48 | (96) | |
| Total comprehensive profit for the period | 3,415 | 2,026 | 4,612 |
Consolidated balance sheet
Unaudited at 31 October 2021
| Note | 31 October 2021 Unaudited £'000 |
31 October 2020 Unaudited £'000 |
30 April 2021 Audited £'000 |
|
| Assets | ||||
| Non-current assets | ||||
| Intangible assets | 25,730 | 21,110 | 26,237 | |
| Property, plant and equipment | 4,225 | 3,584 | 4,131 | |
| Deferred tax asset | 8 | 1,660 | 219 | 1,697 |
| 31,615 | 24,913 | 32,065 | ||
| Current assets | ||||
| Inventories | 6,957 | 4,087 | 6,059 | |
| Trade and other receivables | 7,786 | 4,456 | 6,743 | |
| Cash and cash equivalents | 3,513 | 3,436 | 3,836 | |
| 18,256 | 11,979 | 16,638 | ||
| Total assets | 49,871 | 36,892 | 48,703 | |
| Liabilities | ||||
| Non-current liabilities | ||||
| Borrowings | 6 | 1,029 | 2,400 | 1,714 |
| Lease liabilities | 6 | 1,936 | 2,211 | 2,050 |
| Deferred tax liability | 8 | 2,993 | 2,037 | 2,479 |
| 5,958 | 6,648 | 6,243 | ||
| Current liabilities | ||||
| Trade and other payables | 9,727 | 5,412 | 12,826 | |
| Provisions | 230 | 85 | 230 | |
| Borrowings | 6 | 1,371 | 1,371 | 1,371 |
| Lease liabilities | 6 | 498 | 562 | 509 |
| Current tax payable | 1,165 | 510 | 750 | |
| 12,991 | 7,940 | 15,686 | ||
| Total liabilities | 18,949 | 14,588 | 21,929 | |
| Net assets | 30,922 | 22,304 | 26,774 | |
| Equity | ||||
| Share capital | 996 | 978 | 984 | |
| Merger reserve | 2,606 | 2,606 | 2,606 | |
| Merger relief reserve | 424 | 424 | 424 | |
| Share premium account | 9,359 | 8,805 | 9,092 | |
| Share-based payment reserve | 728 | 619 | 714 | |
| Foreign exchange reserve | (76) | 229 | 85 | |
| Retained earnings | 16,885 | 8,643 | 12,869 | |
| Total equity | 30,922 | 22,304 | 26,774 |
Consolidated statement of cash flows
Unaudited for the six months ended 31 October 2021
| Note | 6 months to 31 October 2021 Unaudited £'000 |
6 months to 31 October 2020 Unaudited £'000 |
12 months to 30 April 2021 Audited £'000 |
|
| Operating activities | ||||
| Net profit for the period | 3,577 | 1,978 | 4,708 | |
| Depreciation and amortisation | 1,315 | 1,096 | 2,562 | |
| Finance costs and income | 105 | 164 | 287 | |
| Impairment of intangibles | - | 18 | 130 | |
| Changes in provisions | - | - | (15) | |
| Taxation expense in the income statement | 1,526 | 393 | 936 | |
| Employee share-based payments | 159 | 152 | 305 | |
| Operating cash flow before movement in working capital | 6,682 | 3,801 | 8,913 | |
| Changes in inventories | (886) | (400) | (977) | |
| Changes in trade and other receivables | (573) | (745) | (2,363) | |
| Changes in trade and other payables | (808) | 2,059 | 6,137 | |
| Cash generated from operations | 4,415 | 4,715 | 11,710 | |
| Interest paid | (105) | (164) | (287) | |
| Income taxes paid | (735) | (493) | (1,166) | |
| Cash generated from operating activities | 3,575 | 4,058 | 10,257 | |
| Cash flows from investing activities | ||||
| Capital expenditure on fixed assets | (510) | (109) | (667) | |
| Sale of property plant and equipment | 32 | - | 67 | |
| Expenditure on development and other intangibles | (115) | (116) | (367) | |
| Acquisition of subsidiaries, net of cash | 7 | (2,500) | - | (4,057) |
| Net cash used in investing activities | (3,093) | (225) | (5,024) | |
| Cash flows from financing activities | ||||
| Payments of lease liabilities | (296) | (224) | (489) | |
| Proceeds from bank borrowings | - | - | 5,404 | |
| Repayment of borrowings | (686) | (5,562) | (11,652) | |
| Issues of shares & proceeds from option exercises | 278 | - | 155 | |
| Net cash (used in)/from financing activities | (704) | (5,786) | (6,582) | |
| Net (decrease)/increase in cash and cash equivalents | (222) | (1,953) | (1,349) | |
| Cash and cash equivalents, beginning of period | 3,836 | 5,290 | 5,290 | |
| Foreign currency movements on cash balances | (101) | 99 | (105) | |
| Cash and cash equivalents, end of period | 3,513 | 3,436 | 3,836 |
Consolidated statement of changes in equity
Unaudited for the six months ended 31 October 2021
| 6 months to 31 October 2021 - unaudited | Share capital £'000 |
Merger reserve £'000 |
Merger relief reserve £'000 |
Foreign exchange £'000 |
Share premium £'000 |
Share-based payment reserve £'000 |
Retained earnings £'000 |
Total £'000 |
| Balance at 1 May 2021 | 984 | 2,606 | 424 | 85 | 9,092 | 714 | 12,869 | 26,774 |
| Shares issued | 12 | - | - | - | 267 | - | - | 279 |
| Tax in respect to share options | - | - | - | - | - | - | 295 | 295 |
| Share-based payments transfer | - | - | - | - | - | (145) | 145 | - |
| Share based payments | - | - | - | - | - | 159 | - | 159 |
| Transactions with owners | 12 | - | - | - | 267 | 14 | 440 | 733 |
| Profit for the period | - | - | - | - | - | - | 3,576 | 3,576 |
| Foreign exchange on consolidation of subsidiaries | - | - | - | (161) | - | - | - | (161) |
| Total comprehensive income for the period | - | - | - | (161) | - | - | 3,576 | 3,415 |
| Balance at 31 October 2021 | 996 | 2,606 | 424 | (76) | 9,359 | 726 | 16,885 | 30,922 |
| 6 months to 31 October 2020 - unaudited | Share capital £'000 |
Merger reserve £'000 |
Merger relief reserve £'000 |
Foreign exchange £'000 |
Share premium £'000 |
Share-based payment reserve £'000 |
Retained earnings £'000 |
Total £'000 |
| Balance at 1 May 2020 | 975 | 3,030 | - | 181 | 8,746 | 467 | 6,665 | 20,064 |
| Shares issued | 3 | - | - | - | 59 | - | - | 62 |
| Share based payments | - | - | - | - | - | 152 | - | 152 |
| Transactions with owners | 3 | - | - | - | 59 | 152 | - | 214 |
| Profit for the period | - | - | - | - | - | - | 1,978 | 1,978 |
| Foreign exchange on consolidation of subsidiaries | - | - | - | 48 | - | - | - | 48 |
| Total comprehensive income for the period | - | - | - | 48 | - | - | 1,978 | 2,026 |
| Balance at 31 October 2020 | 978 | 3,030 | - | 229 | 8,805 | 619 | 8,643 | 22,304 |
| 12 months to 30 April 2021 - audited | Share capital £'000 |
Merger reserve £'000 |
Merger relief reserve £'000 |
Foreign exchange £'000 |
Share premium £'000 |
Share-based payment reserve £'000 |
Retained earnings £'000 |
Total £'000 |
| Balance at 30 April 2020 | 975 | 3,030 | - | 181 | 8,746 | 467 | 6,665 | 20,064 |
| Restatement | - | (424) | 424 | - | - | - | - | - |
| Adjusted balances at 30 April 2020 | 975 | 2,606 | 424 | 181 | 8,746 | 467 | 6,665 | 20,064 |
| Shares issued | 9 | - | - | - | 346 | - | - | 355 |
| Tax in respect to share options | - | - | - | - | - | - | 1,438 | 1,438 |
| Share-based payments transfer | - | - | - | - | - | (58) | 58 | - |
| Share based payments | - | - | - | - | - | 305 | - | 305 |
| Transactions with owners | 9 | - | - | - | 346 | 247 | 1,496 | 2,098 |
| Profit for the year | - | - | - | - | - | - | 4,708 | 4,708 |
| Foreign exchange on consolidation of subsidiaries | - | - | - | (96) | - | - | - | (96) |
| Total comprehensive income | - | - | - | (96) | - | - | 4,708 | 4,612 |
| Balance at 30 April 2021 | 984 | 2,606 | 424 | 85 | 9,092 | 714 | 12,869 | 26,774 |
Notes to the interim financial statements
1. General information and basis of preparation
SDI Group plc (formerly known as Scientific Digital Imaging 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 2021 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 2021. 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 6 December 2021
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 2021 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 2021 and for the six months ended 31 October 2020 has not been audited.
2. Principal accounting policies
The principal accounting policies adopted in the preparation of the condensed consolidated interim information are consistent with those followed in the preparation of the Group's financial statements for the year ended 30 April 2021.
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 31 October 2021 Unaudited £'000 |
6 months to 31 October 2020 Unaudited £'000 |
12 months to 30 April 2021 Audited £'000 |
|
| Operating Profit (as reported) | 5,207 | 2,535 | 5,931 |
| Adjusting items (all costs): | |||
| Non-underlying items | |||
| Share based payments | 159 | 152 | 305 |
| Amortisation of acquired intangible assets | 465 | 379 | 1,153 |
| Exceptional items | |||
| Reorganisation costs | - | 129 | 132 |
| Acquisition and fundraising costs | - | - | 179 |
| Total adjusting items within Operating Profit | 624 | 660 | 1,769 |
| Adjusted Operating Profit | 5,831 | 3,195 | 7,700 |
Adjusted Profit Before Tax is defined as follows:
| 6 months to 31 October 2021 Unaudited £'000 |
6 months to 31 October 2020 Unaudited £'000 |
12 months to 30 April 2021 Audited £'000 |
|
| Profit Before Tax (as reported) | 5,102 | 2,371 | 5,644 |
| Adjusting items (as above) | 624 | 660 | 1,769 |
| Adjusted Profit Before Tax | 5,726 | 3,031 | 7,413 |
3. Alternative Performance Measures (continued)
Adjusted EPS is defined as follows:
| 6 months to 31 October 2021 Unaudited £'000 |
6 months to 31 October 2020 Unaudited £'000 |
12 months to 30 April 2021 Audited £'000 |
|
| Profit for the Period (as reported) | 3,576 | 1,978 | 4,708 |
| Adjusting items (as above) | 624 | 660 | 1,769 |
| Less: taxation on adjusting items calculated at the UK statutory rate | (119) | (125) | (336) |
| Adjusted profit for the period | 4,081 | 2,513 | 6,141 |
| Divided by diluted weighted average number of shares in issue (Note 5) | 104,138,768 | 101,611,426 | 102,799,084 |
| Adjusted Diluted EPS | 3.92p | 2.47p | 5.97p |
Net Operating Assets is defined as follows:
| 31 October 2021 Unaudited £'000 |
31 October 2020 Unaudited £'000 |
30 April 2021 Audited £'000 |
|
| Net Assets | 30,922 | 22,304 | 26,774 |
| Deferred tax asset | 1,660 | 219 | 1,697 |
| Corporation tax asset | 486 | 79 | 17 |
| Cash and cash equivalents | 3,513 | 3,436 | 3,836 |
| Borrowings (current and non-current) | (4,834) | (6,544) | (5,644) |
| Deferred consideration | - | - | (2,350) |
| Deferred tax liability | (2,993) | (2,037) | (2,479) |
| Current tax payable | (1,165) | (510) | (750) |
| Total adjusting items within Net Assets | (3,333) | (5,357) | (5,673) |
| Net Operating Assets | 34,255 | 27,661 | 32,447 |
4. Segmental analysis
| 6 months to 31 October 2021 Unaudited £'000 |
6 months to 31 October 2020 Unaudited £'000 |
12 months to 30 April 2021 Audited £'000 |
|
| Revenues | |||
| Digital Imaging | 11,373 | 6,940 | 15,778 |
| Sensors & Control | 13,292 | 7,186 | 19,288 |
| Group | 24,665 | 14,126 | 35,076 |
| Adjusted Operating Profit | |||
| Digital Imaging | 4,253 | 2,075 | 5,165 |
| Sensors & Control | 2,505 | 1,569 | 4,360 |
| Other | (927) | (449) | (1,825) |
| Group | 5,831 | 3,195 | 7,700 |
| Amortisation of acquired intangible assets | |||
| Digital Imaging | (92) | (92) | (175) |
| Sensors & Control | (377) | (291) | (978) |
| Group | (469) | (383) | (1,153) |
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 2021 Unaudited £'000 |
31 October 2020 Unaudited £'000 |
30 April 2021 Audited £'000 |
|
| Operating Assets excluding acquired intangible assets | |||
| Digital Imaging | 9,612 | 6,942 | 7,895 |
| Sensors & Control | 9,757 | 5,825 | 9,683 |
| Other | (257) | 331 | 131 |
| Group | 19,112 | 13,098 | 17,709 |
| Acquired intangible assets | |||
| Digital Imaging | 5,107 | 5,282 | 5,195 |
| Sensors & Control | 19,978 | 14,777 | 20,251 |
| Group | 25,085 | 20,059 | 25,446 |
| Operating Liabilities | |||
| Digital Imaging | (4,650) | (3,051) | (5,439) |
| Sensors & Control | (4,192) | (2,200) | (4,204) |
| Other | (1,101) | (245) | (1,064) |
| Group | (9,943) | (5,496) | (10,707) |
| Net Operating Assets | |||
| Digital Imaging | 10,069 | 9,173 | 7,650 |
| Sensors & Control | 25,543 | 18,402 | 25,731 |
| Other | (1,357) | 86 | (934) |
| Group | 34,255 | 27,661 | 32,447 |
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 attributable to shareholders £'000 |
Weighted average number of shares |
Earnings per share amount in pence |
|
| Basic earnings per share: | |||
| Period ended 31 October 2021 | 3,576 | 99,120,392 | 3.61 |
| Period ended 31 October 2020 | 1,978 | 97,582,755 | 2.03 |
| Year ended 30 April 2021 | 4,708 | 97,852,313 | 4.81 |
| Dilutive effect of share options: | |||
| Period ended 31 October 2021 | 5,018,376 | ||
| Period ended 31 October 2020 | 4,028,671 | ||
| Year ended 30 April 2021 | 4,946,771 | ||
| Diluted earnings per share: | |||
| Period ended 31 October 2021 | 3,576 | 104,138,768 | 3.43 |
| Period ended 31 October 2020 | 1,978 | 101,611,426 | 1.95 |
| Year ended 30 April 2021 | 4,708 | 102,799,084 | 4.58 |
6. Borrowings
| 31 October 2021 £'000 |
31 October 2020 £'000 |
30 April 2021 £'000 |
|
| Within one year: | |||
| Bank finance | 1,371 | 1,371 | 1,371 |
| Leases | 498 | 562 | 509 |
| 1,869 | 1,933 | 1,880 | |
| After one year and within five years: | |||
| Bank finance | 1,029 | 2,400 | 1,714 |
| Leases | 1,065 | 1,297 | 2,050 |
| 2,094 | 3,697 | 3,764 | |
| After more than five years: | |||
| Leases | 871 | 914 | - |
| Total borrowings | 4,834 | 6,544 | 5,644 |
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 01 November, directly after the period end, the Group agreed a new £20m revolving loan facility with HSBC, committed for 3 years, with covenants relating to leverage (net debt to EBITDA) and interest coverage. The £2,400,000 of short term and long-term bank finance shown above was transferred to the new facility.
7. Acquisitions
During the previous financial year, the Group completed the acquisition of Monmouth Scientific Limited for which contingent consideration of £2.35 million was outstanding at 30 April 2021. This amount was settled in cash in the current period.
On 12 August 2021, Monmouth Scientific acquired the trade and assets of the Clean Tent business, for a cash consideration of £150,000.
8. Taxation
The Group has estimated an effective tax rate of 18.1% for the year and has applied this rate to the profit before tax for the period. The Group has further booked a charge of £597,000 to align certain deferred tax assets and liabilities to the new statutory tax rate of 25% enacted for periods from March 2023. A gain of £295,000 resulting from changes to the estimate of future tax relief from share option exercises, including the estimated effect of changes in the tax rate, has been booked directly to equity.
SDl Group plc
Beacon House
Nuffield Road
Cambridge
CB4 1TF
UK
Telephone: +44 (0)1223 727144
Fax: +44 (0)1223 727101
Email: [email protected]
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