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
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
FR CKODQBBKBBOD
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