Sdi Share Discussion Threads

[sharesoc] 22/11/2015 16:06

Scientific Digital Imaging present at our next growth company seminar which is on Tuesday. Shareholders and potential investors may be interested in attending:

[gnnmartin] 17/11/2015 23:41

The SDI presentation at Finncap is on the 24th November, not the 25th. See

[gnnmartin] 04/11/2015 11:54

I won't be able to make the 25th. Domestic engagement clash.

[hastings] 04/11/2015 11:21

Hi timbo33, hope you have a great time away.I am also hoping to go along to the event, which should at least give SDI a platform on which to make others aware of where it is at.CheersH

[timbo003] 04/11/2015 08:54

I have just received an email from Mike Creedon to say that he will be presenting at the next Finncap ShareSoc meeting on November 25th (as suggested at the AGM). I won't be able to go to that one as I am on hols down under until Dec 2nd, but hopefully Nigel and others might be able to go along and ask the right questions.

[gnnmartin] 30/10/2015 12:48

An interesting read hastings.

Without knowing more about why the company is expected to become so profitable, I'm deeply skeptical, but I hold & hope.

[hastings] 30/10/2015 12:38

May be of interest to others holding or taking a look.
hxxp://www.cambridge-news.co.uk/Private-Punter-SDI-s-Sentek-buy/story-28084191-detail/story.html

[timbo003] 29/10/2015 19:40

>>>>Nigel

£400K refers to EBIT and PBT for full year ending April 2016. It came from the BOD at the AGM although they were somewhat reluctant to give it out. I have since seen it confirmed in a Finncap note (July 2015), although it's all a bit academic now given the acquisition news.

[gnnmartin] 29/10/2015 18:12

Tim, where does the forecast of £400k profit come from? That's classical profit after tax, not adjusted profit or EBITDA or any of the other quantities that so often get carelessly described as profit?

[gnnmartin] 28/10/2015 18:22

I can't decide what I feel about the acquisition. I'm rather puzzled by the loan details, and a little alarmed at: the Directors believe that ... the Company would be able to refinance the Bridge Facility so as to enable the amount outstanding under the Bridge Facility to be repaid over the medium term. There can, however, be no guarantee that such a refinancing would be available, leaving the Company in default, and the terms of any such refinancing, if available, may be on terms that are more onerous than the terms of the Term Loan Facility.

(My emphasis). Still, hopefully they know what they are doing.

[gnnmartin] 26/9/2015 22:32

Thanks for the feedback. I'm alarmed at the suggestion that the EU might insist the EIS changes are backdated to the start of the year.

I too aways challenge the 'in line with expectations' announcements. It should considered insider trading: they are giving information to the clients of the financial institutions who have set the expectations but not made those expectations known to the general public.

I take it you did not form any view as to whether the capitalisation of R&D is reasonable. I left the last AGM feeling that perhaps some work undertaken for a prospective sale was being capitalised as R&D but there was not sufficient expectation that it would be of long term benefit, so ought to be considered as a cost of sale.

[timbo003] 25/9/2015 17:32

The Scientific Digital Imaging 2015 AGM was held at Botanic House, 100 Hills Road, Cambridge CB2 1PH on 23 September 2015 at 11:00 am. The venue is conveniently situated within 500m of the train station which has a fast service to London’s Kings Cross, so it was very easy to get there.

The meeting was attended by the BOD, myself and one other shareholder (JS) who had previously run Synoptics for a while when it was a private company many moons ago.

We zoomed through the formal business and then went straight on to questions. I began by stating that I was new to the share and had bought in at the recent placing having been initially attracted by the EIS tax reliefs available. I then asked how the new VCT/EIS rules (see link below for summary of proposed new rules) may affect SDI’s strategy of buy and build. This lead to a discussion which probably went on for 15 minutes or so.


Basically the BOD were concerned about 2 aspects of the proposed new rules (the details of which are still to be finalised). The two causing concern were the new 7 year maximum age rule and the ban on using state funds for acquisitions. The new rules are due to come into effect following Royal Assent of the 2015 Finance Bill (due October or November) although Brussels may insist that they are back dated to July or even further back to January. I said that a number of VCT managers (who also have to play by these new rules) thought there was a lot of wiggle room on the 7 year rule and it shouldn’t prove too much of a problem (it may not be a problem for SDI), although the new rule on acquisitions would definitely cause problems. I suggested that the BOD could chance it and do another fund raising before Royal Ascent, I think this is something they may already have considered

JS was concerned that there were too many fund raisings where existing shareholders were excluded (he had voted against resolution 5, the disapplication of pre-emption rights) I chipped in on this one with some moral support. The BOD replied that it was all down to cost as an open offer would require a prospectus and there would be other associated costs. I responded that they could compile a list of shareholders who were keen to participate in future placings and offer a private placing for these shareholders, pointing out that other AIM quoted SMEs have done this in the past, for example Surface Transforms (where I participated as a shareholder). I asked how many shareholders were on the share register for SDI, we were told it was just 130 (approx). I suggested that given the very small number they you could probably write to all of them and establish which shareholders would like to participate. This suggestion was generally well received, although one of the NEDs (Anne Simon) opined that it may be stretching the rules. In the end I think they agreed to talk to Finncap about the feasibility of private placings for existing shareholders.

We then had a series of question from both JS and myself on the company’s future strategy and possible exits for shareholders. I began by saying that for a company like SDI there were two possible exit routes for shareholders: either selling shares in a liquid market, or via a trade sale of the whole company. Neither a liquid market or a trade sale seems likely in the foreseeable future due to the illiquidity of the shares and the lack of visible profits to attract a buyer.

The chairman opined that companies the size of SDI with a turnover of £7m were really too small to be quoted on AIM and turnover should be £10m or more, nobody disagreed with this. JS seemed to be fully up to speed on the recent aborted acquisition/merger and he talked about that which got the BOD squirming a bit. They obviously thought the details should not be in the public domain, needless to say I listened avidly, but given the BOD’s apparent sensitivities I will not publish details here. JS commented that the company had been talking about buy and build for years now, but so far had only made one significant acquisition (Opus) which seems more bolt on than complementary and questioned whether buy and build was a realistic strategy. Regarding a sale of the company, the chairman said they had not received any approaches, although they were not actively marketing the company for sale.

I bemoaned the lack of liquidity in the shares, commenting that there were some weeks (let alone days) where there were no share traded, company PR seemed non-existent and increasing liquidity should become one of the BODs priorities. I suggested that they could follow the examples of other aim listed SMEs and sell the investment case to investors, for example sign up with Proactive investors (which costs less than an average PR firm) where you get a dedicated web page, recorded interviews with directors and regular opportunities to present to a group of private investors at the Proactiveinvestors investor evenings. I added that there were other firms offering similar services and in the absence of any earnings forecasts which are accessible to jo public (such as JS and myself) they could commission some paid for research (which is classified as promotional material). This could promote the investment case and give earnings forecasts. Given the BODs reaction to the last suggestion, I think they had considered this before. I added that their broker (Finncap) often hosted investor meetings for ShareSoc at their HQ which were very popular with private investors and they should book a slot to present at one of these to coincide with some decent news flow. This last suggestion definitely struck a chord and the CEO agreed that he would actively look in to this with Finncap.

Having already touched on Research/analysts research notes, I commented that in the annual report the Chairman’s statement referred to results being in line with management expectations. I provocatively asked how are shareholders supposed to know what management’s expectations were given that they are never made available to Jo public? I ask this question at most AIM quoted company AGMs nowadays as it sometimes yields results. Needless to say I received the predictable answer that they are not allowed to give forward guidance to investors and the expectations were in the broker note (which we cannot access). After much persistent moaning, they told us the expected earnings figure for next year, which I cannot publish here, but I will say if you perform a simple calculation on last year’s figures and take away the exceptional items you are pretty much there. As an aside, The next ShareSoc event at Finncap is on Oct 21st, so I will try to procure the Finncap note on SDI (examples of recent brokers notes on client companies are often made available in the lobbies of some brokers, so it may be a simple task).

I asked a few questions on who all the large shareholders were (listed in the annual report) which were adequately answered, I commented that it was disappointing to see that the that CEO held only 7.5K shares and 285K options exercisable at between 12.5p and 30p. In his defence the CEO said he had just been through a very expensive divorce, but conceded that he should have more skin in the game.

We moved on to discuss the current business and I asked what was the ratio of the sales were recurring (or contractual) and what % were one off capital sales. The answer was depressing, with approximately 99% of the sales were one off and 1% were contractual/recurring. We agreed that recurring sales were far more preferable and a lot more popular with investors (and the city). I then asked if there were any scope to improve the ratio. We were told that there were service and maintenance contracts with the equipment sales, but these were largely assigned to the resellers. However the BOD were cautiously optimistic that the proportion of recurring sales could increase in the future as a result of anticipated growing demand for ProReveal. The increased demand should come from a recent change in DoH guidelines on maximum allowable contaminant levels on sterile instruments as outlined in the RNS on May 28th


The ProReveal test is superior in several respects to other quantification methods and it requires the use of a proprietary spray reagent (which just happens to have short shelf life) which only SDI will be able to supply (as a must-have consumable). See links to ProReveal web pages and video:



Many other jurisdictions follow the UK’s lead in setting standards and limits, therefore this could become a large opportunity. The US could be a very big market, although there is unlikely to be a national standard as current practice is for each individual hospital to adopt their own standards for maximum allowable residual contaminant levels. The BOD were not able to quantify the potential opportunity with ProReveal, but they have just commenced a project with MBA students at one of the local colleges to evaluate the opportunity. The CEO stated that when that was complete (and assuming the opportunity is large) it would be a good time to go for a Finncap presentation and to participate in other investor roadshow activities.

I think that sums up most of the Q&As and after about an hour we had both run out of questions so we retired to one of the local cafes for a bite to eat leaving the directors to get on with their post-AGM board meeting.

[gnnmartin] 23/9/2015 23:23

I too look forward to reading your summary.

[hastings] 23/9/2015 17:36

Thanks for that timbo003,I was hoping to make it, but was tied up elsewhere.
Would be interested to hear your thoughts.

Cheers
H

[timbo003] 23/9/2015 17:02

Nigel (and Hastings), I did manage to attend the AGM this morning, there were only two PIs there. I suspect you've met the other shareholder (John) at previous AGMs. Anyway we both had lots of questions and it probably went on for a little over an hour. I will endeavour to distill the main points into a few notes before the weekend.

[gnnmartin] 14/9/2015 18:34

Tim, I don't think I'll be able to get to the SDI AGM this year, so I shall appreciate your feedback if you do get there. Have a look at my post number 163 (Nov last year) to see my concerns.

[hastings] 28/7/2015 08:03

I may join you timbo003.

[timbo003] 28/7/2015 07:59

Results make for a reasonably pleasant read

The AGM is on Wednesday 23rd September, I think I will travel up for that and find out a bit more.

[battlebus2] 28/7/2015 07:14

SCIENTIFIC DIGITAL IMAGING PLC

Final Results for the year ended 30 April 2015

Cambridge, UK 28 July 2015: Scientific Digital Imaging (AIM: SDI, "SDI", the "Company" or the "Group"), the AIM quoted group that designs and manufactures digital technology products for use by the scientific community, through its Synoptics brands (Syngene, Synoptics Health, Synbiosis and Syncroscopy), the Artemis CCD brands (Atik Cameras and Artemis CCD Cameras) and the Opus Instruments brand (Osiris), announces today its final audited results for the year ended 30 April 2015.

Financial Highlights

-- Revenue GBP7.0m (2014: GBP7.0m)
-- Increased gross margin 59.2% (2014: 57.1%)
-- Reduction in other administrative expenses GBP3.7m (2014: GBP4.0m)
-- Operating profit GBP59,000 (2014: GBP1,000)
-- Operating profit for the year of GBP393,000 before costs of reorganisation, acquisition and fundraising costs and share based payments (2014: GBP57,000).

-- Basic profit per share was 0.15p per share (2014: loss of 0.16p)
Operational Highlights

-- Cost restructuring and change in commercial strategy for Synoptics continuing to take effect

-- GBP500,000 new equity investment
-- Atik sales and profitability exceeding budget
-- Synoptics, Opus Instruments and Atik have shown increased sales revenue in H2 across all sales territories contributing to a growth in their turnover and profitability.

Commenting on the results, Ken Ford, Chairman of SDI said: "The Company has delivered profits in a challenging year when significant restructuring took place and investment has been made to ensure new products continue to meet our customers' current and future needs. The Board is confident that SDI is now in a strong position for continued successful organic growth together with the potential for the acquisition of new companies".

[hastings] 30/5/2015 14:10

hxxp://www.cambridge-news.co.uk/SDI-looks-set-clean/story-26597885-detail/story.html

[battlebus2] 27/5/2015 13:53

Buys pushing us higher..

[battlebus2] 26/5/2015 08:15

Yes good news Hastings.

[hastings] 26/5/2015 07:11

Looks as though the market may just be opening up for ProReveal.

[battlebus2] 22/5/2015 14:05

Nice to be back in profit again :))