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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sdi Group Plc | LSE:SDI | London | Ordinary Share | GB00B3FBWW43 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.40 | -0.71% | 55.60 | 55.00 | 56.00 | 57.00 | 55.50 | 56.00 | 431,663 | 16:35:11 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Coml Physical, Biologcl Resh | 67.58M | 3.87M | 0.0372 | 14.92 | 57.75M |
From Apr 2019 to Apr 2024
TIDMSDI
RNS Number : 9120F
Scientific Digital Imaging Plc
18 July 2019
Scientific Digital Imaging plc
("SDI", the "Company" or the "Group")
Final Results for the year ended 30 April 2019
Scientific Digital Imaging 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 final audited results for the year ended 30 April 2019.
Financial Highlights
-- Revenue increased by 20% to GBP17.4m (2018: GBP14.5m) -- Organic revenue growth of 5% with similar performance from both segments -- Gross margin at 66.1% (2018: 65.8%) -- Adjusted profit before tax* increased by 32% to GBP3.0m (2018: GBP2.3m) -- Profit before tax increased by 24% to GBP2.1m (2018: GBP1.7m) -- Cash generated from operations increased by 28% to GBP3.6m (2018: GBP2.9m) -- Net debt** at 30 April 2019 of GBP1.6m
* before acquisition and fundraising costs, amortisation of acquired intangibles, reorganisation costs and share based payments
** cash and cash equivalents less borrowings
Operational Highlights
-- Acquired Fistreem International, a UK manufacturer of water purification products and vacuum ovens for GBP756,000
-- Acquired Thermal Exchange, a UK manufacturer of heat exchangers, coolers and chillers to the industrial, medical and scientific markets for GBP997,000
-- Acquired Graticules Optics, a UK manufacturer of precision micropattern products for GBP3,400,000
-- Placing to raise GBP2.5m from new and existing investors -- Acquired MPB Industries, a UK manufacturer of flowmeters for GBP1,586,000 -- Appointment of Chief Financial Officer, Jon Abell on 2 July 2018 -- Continued investment in the period to drive long term growth
Ken Ford, Chairman of SDI said:
"We are pleased to report on another year of growth. The existing business together with a full year of sales from the new acquisitions Fistreem International, Thermal Exchange, Graticules Optics, and MPB Industries are expected to drive growth and profitability in 2019-20. To maintain and develop its portfolio, SDI will continue its proven strategy of organic and acquisitive growth. The Board is confident that the Group will continue to deliver profitable growth through increased revenue and new acquisitions in 2019-20, and is encouraged by the performance of the business in the new financial year."
FOR FURTHER INFORMATION
Scientific Digital Imaging plc Ken Ford, Chairman Mike Creedon, Chief Executive Officer Jon Abell, Chief Financial Officer www.scientificdigitalimaging.com 01223 727144 finnCap Ltd Ed Frisby/Kate Bannatyne - Corporate Finance Andrew Burdis/Sunila de Silva - ECM 020 7220 0500 JW Communications Julia Wilson - Investor & Public Relations 07818 430 877
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.
About SDI
Scientific Digital Imaging 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 and Fistreem.
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.
Audited Report and Financial Statements, and Annual General Meeting
This financial information does not constitute the Financial Statements. The Group's statutory Audited Report which includes an unqualified audit report and Financial Statements for the year ended 30 April 2019 will in due course be available to view on the Company's website: www.scientificdigitalimaging.com/investors/reports-presentations/ and be sent to shareholders, together with a notice of AGM which will also be available on the Company's website. The Company's Annual General Meeting is due to take place at 11.00 a.m. at the offices of Mills & Reeve LLP at Botanic House, 100 Hills Road, Cambridge CB2 1PH on 23 September 2019.
Chairman's Statement for the year ended 30 April 2019
Performance
I am pleased to report that in the financial year ended 30 April 2019, Scientific Digital Imaging plc (SDI) (the Group) made considerable progress. The Group achieved record revenues, pre-tax profit and earnings per share whilst completing five acquisitions. SDI acquired Fistreem International (September 2018), Ionscope (January 2019), Thermal Exchange (February 2019), Graticules Optics (February 2019) and MPB Industries (April 2019). These businesses have complementary technologies for the sectors that the SDI Group serves and offer potential for continued sales and profitable growth.
Full year Revenues of GBP17.4 million are up 20% and Adjusted Profit before Tax* at GBP3.0 million is up 32.5% against the prior year. Reported Profit before Tax is up by 23.8% to GBP2.1m. This performance has been achieved through 5% organic growth from the businesses already in the Group's portfolio at the start of the financial year, demonstrating continued commercial demand for the niche technologies produced within SDI. The newly acquired businesses have also delivered a contribution in line with the Board's expectations.
On 12(th) February 2019 SDI announced a placing of 7.6 million shares at 34p to help with the funding of the Graticules Optics acquisition (for GBP3.4 million), and raised gross proceeds of GBP2.5 million. The placing included an issue with Primary Bid to permit private clients to participate. SDI also made use of its increased bank facilities to fund the acquisitions.
Strategy
The Group continues to implement a buy and build strategy adding carefully selected acquisitions, where possible funded by earnings and cashflows from the Group's existing businesses, but also using debt or share issues if required. The Group's policy is to acquire profitable, often niche, small/ medium-sized companies with relevant medical and scientific technologies. In order to obtain immediate, continuing earnings enhancements, SDI only acquires businesses with complementary technologies that have sustainable profits and cash generating capability.
The requirement for SDI's products, particularly in the science and technology industries, remains robust. Since many of the Group's businesses trade globally this reduces the potential for volatility in European markets as a result of Brexit uncertainty and currency fluctuations. Long-term market drivers, including the global expansion of automation and in-process measurements to support optimisation across science and industrial applications, should result in continued demand for the Group's technologies. All the major companies where SDI provides original equipment manufacturer (OEM) products and components in their automated systems have signed long-term agreements to ensure continuity of their supply-chain.
Delivering returns to SDI's shareholders is a key objective of the Group and this year the Board has put in place a Long-Term Incentive Plan to incentivise management to increase shareholder value. The Board has decided not to pay a dividend for the year ended April 2019 but will keep this under review in the current year.
Governance and Organisation
The Board remains committed to high standards of corporate governance and has adopted the 2018 QCA Corporate Governance Code after deciding it was best suited to SDI's business aims and ambition.
During the year, SDI's Board has benefitted from the appointment of a new Chief Financial Officer, Jon Abell. His expertise and contribution has already proved valuable and the Board is confident that he will continue to have a very positive impact on the Group's operations. As I have been actively involved in the acquisition process I am now not deemed to be non-executive. The appointment of two strong non-executive directors in the last two years gives the Board confidence that strong corporate governance remains a key point of principle for the Group.
The pleasing results achieved this financial year are due to the hard work of all SDI's staff delivering to budget and quality targets and the Board would like to thank all of them for their contribution to this year's positive performance.
Current Trading and Outlook
Since 2014 SDI has seen turnover rise from GBP7 million to GBP17.4 million and a Loss Before Tax of GBP38,000 become a Profit Before Tax of GBP2.1 million. The market capitalisation has been below GBP2 million and is now around GBP50 million and a share price once at 8p is currently over 50p (at date of this report).
The Board believes that the scientific, technology and medical sectors in which SDI operates are ripe for further acquisitions and consolidation. SDI's attraction to a company looking to sell are multiple, including providing the support and investment required whilst, in most cases, leaving the management team in place. In the coming year SDI will continue to integrate the five newly acquired businesses into the Group according to their needs. The Group is focusing on organic growth but also expects to add at least one new business that complements SDI's capabilities in the financial year ending in April 2020.
The year has started well and a further announcement will be made at the Annual General Meeting on our progress. The Board is confident that SDI will continue to deliver profitable growth in 2019-20.
Ken Ford
Chairman
17 July 2019
Chief Executive's Operating Report for the year ended 30 April 2019
Group revenues for the financial year ended 30 April 2019 grew from GBP14.5 million to GBP17.4 million, an increase of 20%. This reflects organic growth and the full year contributions of Applied Thermal Control and Quantum Scientific Imaging, acquired in 2017/2018, as well as acquisitions in the year. During this financial year, a record number of five companies were acquired at a cost of GBP6.8 million. Acquisition costs were part-funded by an oversubscribed share issue in February 2019, which raised proceeds of approximately GBP2.4 million, from the Company's existing bank facilities and from the cashflows of the Group's existing businesses. The Group now has a market capitalisation of approximately GBP50 million.
Revenues and profit
SDI's nine digital imaging brands delivered GBP9.4 million revenue and a 20% operating profit during the past financial year. Revenues have been enhanced by organic growth of 5% and the acquisition of Fistreem International, Ionscope and Graticules Optics into the digital imaging division in 2018/19. Demand for products from the Atik brands remains robust across all global markets. Atik is now the largest division in the SDI Group. This year's highlights for Atik include GBP0.5 million revenue from Quantum Scientific Imaging which was acquired in 2018 for GBP0.25 million and GBP0.4 million revenue from sales of the new Opus Apollo camera. QSI is now fully integrated into Atik's manufacturing, design and commercial facilities. Additionally, Atik's largest OEM customer, a major US-based life science company rated Atik very highly for customer support and increased their purchases by 90% during the financial year.
SDI's five sensors and control companies progressed from GBP6.8 million to GBP8.0 million in revenue, an increase of 17% in this financial year. Revenues have been enhanced by the acquisition of MPB Industries and Thermal Exchange and organic growth of 5%. Sentek had another strong year with demand for its single-use or limited life sensors, from two major life science companies with whom Sentek has five-year supply contracts, continuing to increase. Sentek is the largest company in the sensors and control division.
Adjusted operating profit, our preferred internal measure of profit for our businesses (which excludes reorganisation costs, share based payments, acquisition costs and amortisation of acquired intangible assets) increased 32.2% to GBP3.1m (2018: GBP2.3m). Reported operating profit increased by 23.8% to GBP2.2m.
Basic earnings per share increased by 16.0% from 1.81p to 2.10p; fully diluted earnings per share improved 14.5% to 2.05p (2018: 1.79p).
Operations
SDI has continued to invest in the improvement of its existing products, as well as the development of new technologies and additional manufacturing capacity where required. To keep pace with market requirements, Atik Cameras is expanding its production facility in Lisbon, Portugal. The new site, which is 2.5 times larger than Atik's existing one, will be operational by the end of 2019 and will house additional production staff to ensure demand for the Opus, QSI and Atik cameras is met in the coming year.
The Synoptics site in Cambridge, UK is now the headquarters of two of the newly acquired brands, Fistreem International and Ionscope. Production of Fistreem's technology is being relocated from Loughborough to take advantage of Synoptics' underutilised manufacturing capacity and to provide an additional steady revenue stream to Synoptics from sales of Fistreem consumables.
Sentek's new larger production facility at Braintree with three newly refurbished buildings became operational in 2019. Housing additional clean room space and manufacturing staff, this new site is allowing Sentek to meet targets for quality and production of sterile sensors for two major clients.
Thermal Exchange (acquired in February 2019) and Applied Thermal Control manufacture complementary chiller technologies and are geographically closely located. SDI has identified a suitable site to house both companies in the UK and the relocation will be completed during this financial year. Co-locating both companies on the same site will ensure synergies in development and manufacturing expertise, economies of scale in terms of costs, as well as the opportunity to select and establish a solid global distributor network going forward.
The Group has made these investments to facilitate future growth of revenues and profits while also growing in the current year.
Acquisitions
The UK is a centre of excellence for product innovation and manufacturing with world-leading businesses in many niches of science and technology. As a buy and build group, the acquisition of businesses with complementary technologies is key to the success of SDI. The Group is known to be a supportive buyer that trusts subsidiary management teams with the day-to-day running of their firms, and this reputation underpinned the successes seen in 2018/19 where the Group made a record number of five business acquisitions. After consolidation currently being worked on, these acquisitions will ultimately add two additional manufacturing sites to SDI's estate, both of them near Tonbridge, UK. The acquisitions have also allowed better utilisation of manufacturing capacity at the Synoptics site in Cambridge by Ionscope and Fistreem International, acquired in 2018/19, and the opportunity to find a single new site to house Thermal Exchange, acquired in February 2019, with Applied Thermal Control. The new acquisitions have contributed GBP1.3 million of revenue to the Group in this financial year and SDI expects all of the businesses added to the Group in 2018/19 to continue to be earnings enhancing in the coming year.
The Group has sufficient cash and bank facilities that can be used, with its steady cashflow, to acquire new businesses with complementary technologies and SDI would expect to announce further expansion of the Group with the addition of at least one new business in 2020.
Outlook
Market demand for digital imaging and sensors and control technologies remains strong and is being driven primarily by increased worldwide investment in higher education and a growing trend towards automation and in-process measurement. These are areas across which the SDI Group successfully operates, and are well known in their niches. Although these markets can be subject to short-term variability, influenced by government spending and currency fluctuations, because the Group's geographic and technology markets are spread globally, SDI feels it is well-positioned to remain competitive.
SDI has started 2019 in a strong financial position with good forward orders within the operating businesses. The Group's business will continue to be influenced by world-wide public spending and trade issues (including Brexit) which could impact performance; however, SDI is well diversified and has shown its resilience in the past three years and the outlook in the next financial year continues to be positive.
Mike Creedon
Chief Executive Officer
17 July 2019
Strategy
SDI Group is an AIM-quoted group specialising in the acquisition and development of a portfolio of companies that design and manufacture products for use in digital imaging and sensing and control applications in science, technology and medical markets. Corporate expansion is being pursued, both through organic growth within its subsidiary companies and through the acquisition of high-quality businesses with established reputations in global markets.
The Board believes there are many businesses operating within the market, a number of which have not achieved critical mass, that presents an ideal opportunity for consolidation. This strategy will be primarily focused within the UK but, where opportunities exist, acquisitions in Europe and the United States and elsewhere will also be considered, particularly if these also enable geographic expansion of our existing businesses.
We intend to buy stand-alone businesses as well as smaller entities and technology acquisitions which bolt onto our existing ones.
In previous years we have acquired Atik Cameras, Opus Instruments, Sentek and Astles Control Systems. In the financial year ended 30 April 2018 we acquired Applied Thermal Control and Quantum Scientific Imaging. In the latest financial year ending 30 April 2019, we completed four significant acquisitions: Fistreem International, Thermal Exchange, Graticules Optics and Thermal Exchange. We also acquired Ionscope, which was integrated directly into our Synoptics entity. All of these acquisitions fit our acquisition criteria, which are listed below.
An important element of our strategy is that we are known to be a good acquirer, able to help sellers to achieve a sale quickly and easily, and without surprises.
We keep a lean headquarters, and our businesses are run by seasoned local management with broad discretion within defined limits. Our aim is to grow them, profitably, and we seek to provide them with the resources necessary to grow. Acquired businesses often find that they can grow faster within the SDI Group than they were prepared to do under private ownership, and they are able to learn from and share experience with other companies in the group.
Our current businesses fall broadly into two segments, which we call Digital Imaging and Sensors & Control, and within these groupings there are significant commonalities of applications, industries served and technologies employed. This provides additional opportunity for knowledge sharing, and we have initiated a programme of mentoring within the Sensors & Control businesses.
Growth in revenues and profit within our businesses depends on both technology advancement and seeking new customers, often by expanding geographical reach, and the Board sees geographical expansion as a driver of organic growth for the future.
By lowering the cost of capital of businesses we acquire and by facilitating their profitable growth, our business model has demonstrated that it can provide good returns to shareholders and can be scaled into the future.
Key Performance Indicators
A range of financial key performance indicators are monitored on a monthly basis against budget by the Board and by management, including order pipeline, revenue, gross profit, costs, adjusted operating profit, and cash.
In support of our acquisition strategy as outlined above, we monitor our acquisition pipeline, including any prospects that fail to progress. Post-acquisition, the Board discusses integration progress, and monitors financial performance against our initial plans. Over a longer period, we monitor the return on total invested capital of all of our businesses.
The Board regularly discusses progress in all major research and development and other projects with project and business leaders, including with respect to cost, timelines and adherence to the projects' initial objectives.
Additionally, the Board reserves a specific agenda item for discussion of health and safety and other employee welfare-related issues.
Acquisition criteria
- High quality businesses, with established reputations and customer loyalty in global markets
- Typically niche, small / medium sized companies with relevant scientific, technology or medical products
- Profitable - Growth potential, particularly internationally - Either stand alone or bolt-on to our existing businesses - Motivated management teams in place - Available at a reasonable price
What the SDI Group offers as an acquirer
- Experience in completing acquisitions in a co-operative atmosphere understanding the needs of the seller. It can be a stressful experience, and we aim to make it as easy and certain as possible.
- Continuity of the business as a standalone entity and brand, and continuing employment for staff, if appropriate
- Continuity of management. We would not typically buy a business without management in place, and we especially welcome owner-managers who want to remain active in the business.
- Support and investment to allow the business to grow and thrive as part of a solid and well-financed group of similar businesses
There can be no promises, as we will always act in the interests of our shareholders in the future. However, if we have bought the right businesses, we expect them to thrive.
Consolidated income statement and statement of comprehensive income
For the year ended 30 April 2019
Hot Features
Premium
2019 2018
Total Total
Note GBP'000 GBP'000
Revenue 3 17,427 14,496
Cost of sales (5,902) (4,954)
-------- --------
Gross profit 11,525 9,542
Operating expenses (9,327) (7,766)
Analysed as:
Reorganisation costs (124) (63)
Share based payments (136) (65)
Acquisition and fundraising
costs (288) (165)
Amortisation of acquired intangible
assets (356) (277)
Other operating costs (8,423) (7,196)
------- -------
Operating expenses (9,327) (7,766)
-------------------------------------- ---- ------- -------- ------- --------
Operating profit 2,198 1,776
Net financing expenses (77) (63)
Profit before tax 4 2,121 1,713
Income tax 5 (209) (98)
Profit for the year 1,912 1,615
Earnings per share
Basic earnings per share 7 2.10p 1.81p
Diluted earnings per share 7 2.05p 1.79p
All activities of the Group are classed as continuing.
The results attributable to business combinations in the year are disclosed in Note 30.
The accompanying accounting policies and notes form an integral part of these financial statements.
2019 2018
GBP'000 GBP'000
Profit for the period 1,912 1,615
Other comprehensive income
Items that will subsequently be reclassified
to profit and loss:
Exchange differences on translating foreign
operations 31 (30)
---------- -------
Total comprehensive income for the period 1,943 1,585
========== =======
Consolidated balance sheet
For the year ended 30 April 2019
Note 2019 2018
Assets GBP'000 GBP'000
Intangible assets 17,194 10,727
Property, plant and equipment 767 431
Deferred tax asset 180 37
------- -------
18,141 11,195
Current assets
Inventories 2,576 2,090
Trade and other receivables 3,340 2,221
Cash and cash equivalents 2,494 2,007
------- -------
8,410 6,318
Total assets 26,551 17,513
------- -------
Liabilities
Non-current liabilities
Borrowings 6 4,016 1,391
Deferred tax liability 1,448 969
------- -------
5,464 2,360
Current liabilities
Trade and other payables 3,280 2,309
Provisions for warranties 11 11
Borrowings 6 84 29
Current tax payable 626 244
------- -------
4,001 2,593
Total liabilities 9,465 4,953
------- -------
Net assets 17,086 12,560
======= =======
Equity
Share capital 972 896
Merger reserve 3,030 3,030
Share premium account 8,696 6,390
Own shares held by Employee Benefit
Trust (17) (82)
Other reserves 284 148
Foreign exchange reserve 140 109
Retained earnings 3,981 2,069
------- -------
Total equity 17,086 12,560
======= =======
The financial statements were approved and authorised for issue by the Board of Directors on 17 July 2019.
Mike Creedon Jon Abell Director Director
The accompanying accounting policies and notes form an integral part of these financial statements.
Company registration number: 6385396
Consolidated statement of cash flows
For the year ended 30 April 2019
2019 2018
GBP'000 GBP'000
Operating activities
Net Profit for the year 1,912 1,615
Depreciation 231 240
Amortisation 971 836
Finance costs and income 77 63
(Decrease) increase in warranty provision (12) (8)
Release of deferred consideration - -
Taxation in the income statement 209 98
Employee share based payments 136 65
--------- ---------
Operating cash flows before movement in
working capital 3,524 2,909
Changes in inventories 65 (134)
Changes in trade and other receivables (415) (106)
Changes in trade and other payables 446 161
--------- ---------
Cash generated from operations 3,620 2,830
Interest paid (77) (63)
Income taxes received/(paid) (319) (198)
--------- ---------
Cash generated from operating activities 3,224 2,569
Investing activities
Capital expenditure on fixed assets (419) (184)
Sale of property, plant and equipment 45 3
Expenditure on development and other intangibles (591) (620)
Acquisition of subsidiaries, net of cash (6,668) (1,341)
Deferred consideration paid (152) (1,201)
--------- ---------
Net cash used in investing activities (7,785) (3,343)
Financing activities
Finance leases net repayments (30) (33)
Proceeds from bank borrowing 3,600 1,370
Repayment of borrowings (970) (1,111)
Issues of shares and proceeds from option
exercise 2,449 200
--------- ---------
Net cash from financing 5,049 426
Net changes in cash and cash equivalents 488 (348)
Cash and cash equivalents, beginning of
year 2,007 2,355
Foreign currency movements on cash balances (1) -
========= =========
Cash and cash equivalents, end of year 2,494 2,007
========= =========
Consolidated statement of changes in equity
For the year ended 30 April 2019
Share Merger Foreign Share Own Other Retained Total
capital reserve exchange premium shares Reserves earnings
held by
EBT
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 30 April 2017 889 3,030 139 6,200 (85) 83 454 10,710
Shares issued 7 190 3 200
Share based payments 65 65
Transactions with owners 7 - - 190 3 65 265
Profit for the year 1,615 1,615
Foreign exchange on
consolidation of
subsidiaries (30) (30)
-------- -------- -------------- ------------ -------- --------- --------- --------
Total comprehensive income
for the period - - (30) - - - 1,615 1,585
Balance at 30 April 2018 896 3,030 109 6,390 (82) 148 2,069 12,560
======== ======== ============== ============ ======== ========= ========= ========
Shares issued 76 2,306 65 2,447
Share based payments 136 136
Transactions with owners 76 - - 2,306 65 136 2,583
Profit for the year 1,912 1,912
Foreign exchange on
consolidation of
subsidiaries 31 31
-------- -------- -------------- ------------ -------- --------- --------- --------
Total comprehensive income
for the period - - 31 - - - 1,912 1,943
Balance at 30 April 2019 972 3,030 140 8,696 (17) 284 3,981 17,086
======== ======== ============== ============ ======== ========= ========= ========
1 STANDARDS, AMMENTS AND INTERPRETATIONS TO EXISTING STANDARDS THAT ARE NOT YET EFFECTIVE
The following new Standards and Interpretations, which are yet to become mandatory, have not been applied in the consolidated financial statements.
IFRS 16 'Leases' (effective date 1 January 2019) - this new standard will require the capitalisation of operating leases, such as the Group's building leases, as right of use assets with an offsetting financial liability. The current rental charge will be replaced with a combination of depreciation from the asset and an interest charge from the liability. This is expected to cause a material change to the Consolidated Balance Sheet and a material change to the presentation of amounts within the Consolidated Income Statement. The Group has reviewed the transition options in relation to adopting IFRS 16, and intends to adopt the modified retrospective approach, and will recognise an initial right of use asset amount equal to the lease liability. The Group has performed a detailed review of its leases and concluded that, at 30 April 2019, the right of use asset and offsetting lease liability that would have been recognised in the Consolidated Balance Sheet is GBP2,172k. In the Consolidated Income Statement for the year ended 30 April 2019, under the new standard the net impact on operating costs of the reduction in rental charge offset by depreciation on the right-of-use asset would have been a decrease of GBP28k, increasing operating profit by GBP28k. After taking into account the additional interest charge on the lease liability, the cumulative impact on the Consolidated Income Statement for the year ended 30 April 2019 would have been a reduction of GBP41k. Therefore in the year of adoption shareholders will see operating profit increase, but profit after tax will decrease, and earnings per share will also be impacted. Assuming no further changes to the Group's leases, the increase in operating profit will endure, however in future years the interest charge will reduce as the discount unwinds. It is likely that the Group will renew or replace leases as they expire.
Management expects to implement the new standard with effect from 1 May 2019.
2 ALTERNATIVE PERFORMANCE MEASURES
The Group uses Adjusted Operating Profit, Adjusted Profit Before Tax 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 following table is included to define the term Adjusted Operating Profit:
2019 2018
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Operating Profit (as reported) 2,198 1,776
---------
Adjusting items (all costs):
---------
Reorganisation costs 124 63
---------
Share based payments 136 65
---------
Acquisition and fundraising costs 288 165
---------
Amortisation of acquired intangible assets 356 277
-------------------------------------------- --------- ---------
Total adjusting items 904 570
---------
Adjusted Operating Profit 3,102 2,346
-------------------------------------------- --------- ---------
Adjusted Profit Before Tax is defined as follows:
2019 2018
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Profit before tax (as reported) 2,121 1,713
---------
Adjusting items (all costs):
---------
Reorganisation costs 124 63
---------
Share based payments 136 65
---------
Acquisition and fundraising costs 288 165
---------
Amortisation of acquired intangible assets 356 277
-------------------------------------------- --------- ---------
Total adjusting items 904 570
---------
Adjusted Profit Before Tax 3,025 2,283
-------------------------------------------- --------- ---------
The following table is included to define the term Net Operating Assets.
2019 2018
GBP'000 GBP'000
----------------------------------------- --------- ---------
Net assets 17,086 12,560
---------
Deferred tax asset 180 37
---------
Cash and cash equivalents 2,494 2,007
---------
Borrowings (current and non-current) (4,100) (1,420)
---------
Deferred tax liability (1,449) (969)
---------
Current tax payable (626) (244)
----------------------------------------- --------- ---------
Total adjusting items within Net assets (3,501) (589)
---------
Net Operating Assets 20,586 13,149
----------------------------------------- --------- ---------
3 SEGMENT ANALYSIS
The Digital Imaging segment incorporates the Synoptics brands Syngene, Synbiosis and Synoptics Health, the Atik brands Atik Cameras, Opus and Quantum Scientific Imaging, and the Fistreem, Ionscope and Graticules Optics businesses acquired during the year. These businesses share significant characteristics including customer application, technology, and production location. Revenues derive from the sale of instruments, components for OEM customers' instruments, and from accessories and service.
The Sensors & Control segment combines our Sentek, Astles Control Systems and Applied Thermal Control entities, and the Thermal Exchange and MPB Industries businesses acquired during the year. All of these businesses enable accurate control of scientific and industrial equipment. Their revenues also derive from the sale of instruments, major components for OEM customers' instruments, and from accessories and service.
The Board of Directors reviews operational results of these segments on a monthly basis, and decides on resource allocations to the segments and is considered the Group's chief operational decision maker. Financial information for these segments is available for the year ending 30 April 2018, and is therefore presented below in addition to the information for the current period.
2019 2018
Total Total
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Revenues
---------
Digital Imaging 9,434 7,647
---------
Sensors & Control 7,993 6,849
---------
Group 17,427 14,496
---------
Adjusted Operating Profit
---------
Digital Imaging 1,954 1,041
---------
Sensors & Control 2,165 2,007
---------
Other (1,017) (702)
-------------------------------------------- --------- ---------
Group 3,102 2,346
---------
Amortisation of acquired intangible assets
---------
Digital Imaging 50 7
---------
Sensors & Control 306 270
---------
Other - -
-------------------------------------------- --------- ---------
Group 356 277
-------------------------------------------- --------- ---------
Adjusted Operating Profit has been defined in Note 2.
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 HQ costs.
2019 2018
Total Total
GBP'000 GBP'000
------------------------------------------------ --------- ---------
Operating assets excluding acquired intangible
assets
---------
Digital Imaging 4,828 3,976
---------
Sensors & Control 3,020 1,966
---------
Other 27 20
------------------------------------------------ --------- ---------
Group 7,875 5,962
---------
Acquired intangible assets
---------
Digital Imaging 5,552 1,360
---------
Sensors & Control 10,451 8,148
---------
Other - -
------------------------------------------------ --------- ---------
Group 16,003 9,508
---------
Liabilities
---------
Digital Imaging (1,281) (1,148)
---------
Sensors & Control (1,361) (845)
---------
Other (649) (328)
------------------------------------------------ --------- ---------
Group (3,291) (2,321)
---------
Net operating assets
---------
Digital Imaging 9,099 4,188
---------
Sensors & Control 12,110 9,269
---------
Other (623) (308)
------------------------------------------------ --------- ---------
Group 20,586 13,149
------------------------------------------------ --------- ---------
Net Operating Assets has been defined in Note 2.
The geographical analysis of revenue by destination, analysis of revenue by product or service, and non-current assets by location are set out below:
Revenue by destination of external customer 2019 2018
GBP'000 GBP'000
United Kingdom (country of domicile) 6,624 4,857
Europe 3,216 3,051
Americas 2,805 2,736
Asia 4,539 3,319
Rest of World 243 533
------- -------
17,427 14,496
======= =======
Revenue by product or service 2019 2018
GBP'000 GBP'000
Instruments and spare parts 16,867 13,964
Service 560 532
------- -------
17,427 14,496
======= =======
Non-current assets by location 2019 2018
GBP'000 GBP'000
United Kingdom 17,943 10,988
Portugal 106 96
America 92 111
------- -------
18,141 11,195
======= =======
4 PROFIT BEFORE TAXATION
Profit for the year has been arrived at after charging/(crediting):
2019 2018
GBP'000 GBP'000
Amortisation and write-down of intangible
assets 971 836
Depreciation of property plant and equipment 234 240
Auditor's remuneration Group:
Audit of Group accounts 34 26
Fees paid to the auditor and its associates
in respect of other services:
Audit of Company and of subsidiaries 82 47
Tax advisory services - 5
Tax compliance services 14 17
Audit related assurance services 10 12
Currency exchange loss (gains) 16 33
Rental of land and buildings 176 156
Reorganisation costs 124 63
Acquisition and fundraising costs 288 165
5 TaxATION
2019 2018
GBP'000 GBP'000
Corporation tax:
Prior year corporation tax adjustment 37 (51)
Current tax 469 233
------- -------
506 182
Deferred tax (income)/expense (297) (84)
------- -------
Income tax charge 209 98
======= =======
Reconciliation of effective tax rate
2019 2018
GBP'000 GBP'000
Profit on ordinary activities before tax 2,121 1,713
------- -------
Profit on ordinary activities multiplied
by standard rate of
Corporation tax in the UK of 19% (2018:
19%) 403 325
Effects of:
Expenses not deductible for tax purposes 156 65
Capital allowances less than / (in excess
of) depreciation and amortisation 7 (91)
Additional deduction for R&D expenditure (136) (136)
Share scheme deduction (22) -
Prior year tax adjustments 37 (51)
Update deferred tax liabilities and assets
to enacted future tax rate of 17% (82) -
Establish deferred tax asset relating to
share option exercises (154) -
Transferred to/(from) tax losses - (14)
------- -------
209 98
======= =======
The Group takes advantage of the enhanced tax deductions for Research and Development expenditure in the UK and expects to continue to be able to do so.
6 Borrowings
Borrowings are repayable as follows:
2019 2018
GBP'000 GBP'000
Within one year
Bank finance - -
Finance leases 84 29
------- -------
84 29
------- -------
After one and within five years
Bank finance 4,000 1,370
Finance leases 16 21
------- -------
4,016 1,391
------- -------
Total borrowings 4,100 1,420
======= =======
Bank finance relates to amounts drawn down under the Group's revolving bank facility with HSBC Bank plc. The facility was extended from GBP3,000,000 to GBP5,000,000 and the termination date was extended from 3 April 2021 to 3 April 2023 in December 2019.
7 Earnings per share
The calculation of the basic earnings per share is based on the profits attributable to the shareholders of Scientific Digital Imaging 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 Weighted Earnings
to average per share
shareholders number of amount in
GBP'000 shares pence
----------------------------- -------------- ----------- -----------
Basic earnings per share:
-----------
Year ended 30 April 2019 1,912 91,209,753 2.10
-----------
Year ended 30 April 2018 1,616 89,391,064 1.81
-----------
Dilutive effect of share
options:
-----------
Year ended 30 April 2019 2,120,747
-----------
Year ended 30 April 2018 723,173
-----------
Diluted earnings per share:
-----------
Year ended 30 April 2019 1,912 93,330,500 2.05
-----------
Year ended 30 April 2018 1,616 90,114,237 1.79
----------------------------- -------------- ----------- -----------
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
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