Sdi Share Discussion Threads

[cockerhoop] 28/9/2019 19:54

Great stuff Martin & John - I'll be seeing Mike in Manchester on the 15th Oct so if you have any follow up questions from the AGM let me know.

[rhomboid] 28/9/2019 11:52

Fantastic detailed post Martin...many thanks...it’s reminded me why you write a newspaper column & I don’t!

[alter ego] 28/9/2019 09:55

Much appreciated hastings. Very useful feedback.

[hastings] 28/9/2019 09:30

Thanks again to Rhomboid for his notes and hopefully my comments below tie in but also offer a little in addition.

So, a really good and positive AGM last Wednesday, which saw six of us retail investors attending.

As is often the case the usual business moved along quite quickly, which was followed by Chairman Ken Ford opening up the floor for questions.

Present were Ken, CEO Mike Creedon CFO Jon Abell along with non Exec's Isabel Napper and David Tilston.

Various questions were asked from the floor, the first of which saw Ken Ford confirming that trading had started well and all the divisions were profitable. Mike then added after being asked a question on individual arms of the group that the star performers had continued to be ATIK and Sentek.

We were also then introduced to Jason Evans at ATIK who had joined the company very recently, the reasoning behind this being that the growth and demand were clearly there and it was the right time to bring in further support within this arm.

Expanding, Mike said the expansion at Lisbon was almost complete and that the ATIK business had gone from strength to strength.

Jumping ahead, I caught up with Jason Evans afterwards and he confirmed that he now had a busy schedule with trips abroad lined up including Asia and he appeared very upbeat and enthusiastic on his new role and the ATIK business.

Speaking after the formal business, one shareholder asked as to whether there had been any interest/approach for ATIK or any other part of the business and it was confirmed there had been tentative interest, but nothing that the board would entertain.
Obviously, if a realistic offer came through for something that would be beneficial to shareholders, then the board would obviously consider it. But, they would not let anything go if the price didn't meet their valuation.

Another attendee asked about how different arms of the group were managed, to which Mike explained that existing management teams remained in place and were in contact with other parts of the group and their respective management to explore or drive synergies which were producing positive results.

Mike also visits different businesses across the group on a weekly basis and all representatives from these divisions meet up regularly, so there is plenty of continuity.

Further acquisitions continue to be firmly on the agenda, but SDI remains very selective and will not buy for the sake of it.
That said, there a plenty of opportunities and Ken reiterated that there is no reason why it can't go on to be a £100m/£300m plus business over time.

Pro-reveal ( I asked the question ) remains a slow burner and Ken was keen to point out that it is very small in the bigger picture. Mike did confirm that they have now sold into about 25% of the potential UK market but they don't spend anything on it, its there as part of Synoptics but faces the same NHS issues as it has since its launch, that being lack of money!

Asked whether they would continue to go for acquisitions of a similar size or plump for something much bigger, both Ken and Mike said they would stick to their successful strategy in terms of criteria and were very wary of taking on anything larger.
It was added that there are plenty of opportunities out there at the smaller end and they are now seeing people come to them as opposed to having to seek and identify.
Worth mentioning too that non exec David Tilston was on the board at Sepura before it embarked on its fateful big Spanish acquisition which led to its demise, so I suspect that he would be of the same opinion and can provide some sound advice to complement the other board members.

There are also lots of opportunities going forward across the group though and they sounded confident of prospects ahead and importantly where they are at now.

The founder of Astles control systems was also present and I was fortunate to have a really good chat with him afterwards where he confirmed the business there was trading well.
This division is involved in chemical dosing and control systems for beverage cans and the automotive industry.
Very niche and global they enjoy an increasingly diverse client base although do continue to have a number of major customers.
Interestingly, since one important customer was acquired by a competitor in 2017 which could have been potentially problematic it has actually proved a positive, with new business being won from the acquirer in a number of locations.

He also pointed out to me that the move away from plastics was now benefiting the beverage canning space which is already forecast to continue growing year on year.

Mike also mentioned that Fistreem's relocation to Cambridge will be complete in a few weeks and that is clearly a positive for the business going forward which will also save on costs.

All in all we were there for a good couple of hours and the atmosphere was certainly a positive one with all members of the board very open and engaging and other holders expressing satisfaction.

The interim results are due out in December and we will know more then, but for now the business is going well as expected and despite the Brexit issues it was reiterated once more that SDI's only possible concerns on this would be of any delays in moving of goods, which as I have said before would hit most businesses in some way.
Personally, very happy to hold and it continues to be a great journey for me which started a good few years ago now.

[alter ego] 27/9/2019 16:44

Many thx rhomboid. Very informative.

[hastings] 27/9/2019 16:29

Many thanks Rhomboid, excellent summary. I will add something myself tomorrow which will hopefully tie in with your observations.

[robow] 27/9/2019 15:08

Many thanks Rhomboid for sharing your insights

[rhomboid] 27/9/2019 14:49

AGM notes previously shared on Twitter but for completeness i’ll Post them here too

Random notes

Overall business is trading well....Acquisition strategy is delivering cross company sales opportunities, lots of knowledge sharing

They are Brexit tolerant...no impacts of note anticipated

Acquisition pipeline is strong..more businesses are being offered to them as they are seen as ‘good acquirers’ ...looking after the people & growing the business & retirement sellers typically are staying involved/invested

Those just acquired are integrating well with no unexpected issues..important to note they acquire cash generative, profitable businesses with market leading niches...many sell globally

Acquisitions are small ..but have mgt in place that simply need guidance, back up, & the eagle eye of Mr Creedon who is in perpetual motion 🙂

Geographic spread is relatively tight ...Stansted to Lisbon flights apart

Atik cameras are moving to new premises being fitted out now...50% bigger capacity..since acquisition staff numbers have gone from 6 to 30 with more on the way

New OSI higher price product about to launch...new hire Atik Sales Director Jason Evans was present at the AGM & the opportunity seems to have him motivated

Jon Abell CFO is recruiting a senior Financial Controller with commercial instincts..that will help future acquisitions & their bedding in process

5% organic growth is atypically low..(due to timing of acquisitions/calendarisation) I’m fully expecting a higher figure going forward

Martin @privatepunter will no doubt be along shortly to pen something...but a v positive AGM & I envisage holding SDI shares for as long as I’m drawing breath 🙂

[buywell4] 25/9/2019 08:59

More wise words. Should sell these NOW.


buywell325 Sep '19 - 08:44 - 3098 of 3098

buywell makes it a point to NEVER invest on anything that has a NEGATIVE tangible value per share

common sense really

[hastings] 25/9/2019 07:37

Agreed my take too rivaldo.Hopefully learn a bit more at the AGM later.

[pireric] 25/9/2019 07:35

Very similar statement in Sept 2017 and 2018. And in each of those years, they went on to beat thereafter, and that was ex acquisitions. They display what I like in a mgmt team - they set expectations conservatively and hence follow the route of underpromise and overdeliver

Today's RNS also derisks the acquisitions made last year quite nicely and shows for the first time (though still not 100% certain), that the acq strategy is not creating operational hiccups. Which is a pretty important positive

[rivaldo] 25/9/2019 07:32

Agreed, absolutely fine. The key point here is that SDI are "comfortable" with both current trading and expectations at this early point, suggesting that they're pretty relaxed about being in line and may well do a degree better than that assuming things continue to go well.

[pireric] 25/9/2019 07:19

AGM trading statement out and absolutely fine. In line with expects and new year off to a good start. Happy with mkt expectations which are for revenues of £23.2m (+33% y/y, 5% org), and adj. EPS diluted of 3.57p. Rolling 12m fwd P/E is 14x

Look forward to any comments AGM attendees may be able to share later today or tomorrow!

[buywell3] 25/9/2019 07:13

AGM Trading Update



The Group has made a good start to the new financial year. Despite the potential for economic headwinds, the Board is comfortable with current trading and in delivering financials in line with market expectations for the year. The Group continues to perform well and we look forward to updating the market further with our half year results in December 2019.

[pireric] 24/9/2019 08:48

Good post - looking back through JDGs organic growth trends is quite interesting in that most years we are talking about around mid single digits

So I've come around to the mindset that I'm absolutely fine with low to mid single digits here as what really drives the share price growth story is the inorganic aspects. I.e. SDIs growth I imagine will be more like 25-50% organic going forward on average depending on how much M&A per year

That said, of course we'd like to see at least mid single digit to reflect that there are real operational improvements happening at the holding companies, and I think that's where JDG has really excelled in recent years. While it has done less M+A than 3-5 years ago and that really worked for shareholders, organic growth on revenues, but more importantly at the profits level has been really impressive.

Hence I definitely appreciate the anecdotal holding company operational improvements SDI is giving at results releases (e.g. around capacity increases at Atik)

[fillspectre] 23/9/2019 21:31

Wednesday's AGM will be interesting. I'm not going but am looking forward to reading the regular contributions from those bulletin board members that do attend. Certainly looking like interest is stirring again in SDI as the share trading volume is beginning to get back to the daily numbers we were getting used to in early 2019.
The five new Companies purchased Winter 2018 through to Spring 2019 hopefully are being embedded nicely into the SDI larger organisation. I like the fact a full six months has gone by without further acquisitions as sometimes a pause is necessary for Management to catch up with the assimilation. Plus we need concrete evidence that the selection of these Companies for their immediate Group profit enhancing ability is being validated by the numbers. The organic growth wasn't great last year at 5% - there is nothing wrong with the buy and build model as long as the buying is without exception smartly done. Fils

[sharesoc] 23/9/2019 20:32

We have a growth company seminar on the 15th October in Manchester with Scientific Digital Imaging lined up to present. This may be of interest to potential investors or current shareholders. More details and registration can be found here:

[pireric] 20/9/2019 11:15

Tinypic has shut down so need to find an alternative image hosting service that works with ADVFN!! Have reposted the current forecasts above, and the current next 12 months P/E ratio

I'm not expecting fireworks with the SDI AGM but quiet progress and usual comments on political stuff. But time to overweight this is between accretive acqs and when share price is at a low ebb IMO. So have taken this back to 30% of folio again this morn at ~51p. ~13.6x NTM P/E. What also helps is that, from acquisitions already concluded in the last financial year, they should be able to deliver >30% revenue growth this year, and forecasts are for c. 18% adj. EPS growth (higher tax holds back %). And that should screen well for a lot of investors

[buywell3] 04/9/2019 12:37

Time looks opportune IMO for another acquisition/s

With the GBP now as cheap as chips

Buying decent profit making UK unlisted companies makes sense

Sense that means SDI Group gets bigger and will attract a bid from overseas at a discount of around 20% to what it was 1yr ago , 30% to what it was 2 yrs ago , and 50% to what it was about 5 yrs ago.

If it means taking on another 2M to 3M bank debt ……. rates are low for say 3 yr to 5yr deals

Brexit one way or another will soon get sorted ……. so IMO the time is right to buy

[s_a_b] 03/9/2019 17:20

2019 ARhttps://scientificdigitalimaging.com/wp-content/uploads/2019/09/SDI-Annual-Report-2019.pdf

[s_a_b] 02/9/2019 09:11

Thanks Rhomboid. Will look out for them this week.

[rhomboid] 01/9/2019 14:53

2018 AR...2019 not yet published..will no doubt be this week to allow time for perusal before the AGM in 3 weeks

[s_a_b] 01/9/2019 09:06

Has anyone seen the full annual accounts to April? Had a look on their website but couldn't find a copy to download.