SDI Group plc
Annual Report 2022
SDl Group plc (SDI) is an AIM-listed
company specialising in the design
and manufacture of products for use
within a number of imaging and sensing
and control applications including life
sciences, healthcare, astronomy, precision
optics, measurement instrumentation
and art conservation markets. Corporate
expansion is via organic growth within
its subsidiary companies and through
the acquisition of complementary, niche
technology businesses with established
reputations in global markets.
Contents
Strategic Report
01 Highlights
02 Group Overview
04 Why Invest in SDI
06 Our Specialist Company Portfolio
– Digital Imaging
– Sensors & Control
10 Chairman’s Statement
12 Chief Executive Officer’s Report
18 Chief Financial Officer’s Report
20 Strategy & Key Performance Indicators
22 Section 172 (1) Report
24 Environmental, Social & Governance
25 Principal Risks & Uncertainties
Governance Report
26 Our Directors
27 Corporate Governance Statement
32 Report of the Audit Committee
33 Report of the Remuneration Committee
34 Directors’ Remuneration Report
36 Directors’ Report
Financial Statements
40 Report of the Independent Auditor
54 Consolidated Income Statement &
Statement of Comprehensive Income
55 Consolidated Balance Sheet
56 Consolidated Statement of Cash Flows
57 Consolidated Statement of Changes in Equity
58 Notes to the Consolidated Financial Statements
90 Company Balance Sheet
91 Company Statement of Changes in Equity
92 Notes to the Company Financial Statements
99 Seven-Year Summary
100 Shareholder Information
Highlights
01
Revenue
increased to £49.7m (2021: £35.1m)
including 21.6% organic growth
Adjusted operating profit*
increased to £12.1m (2021: £7.7m)
Adjusted profit before tax*
increased to £11.8m (2021: £7.4m)
Basic EPS (earnings per share)
increased to 7.53p (2021: 4.81p)
Diluted EPS
increased to 7.23p (2021: 4.58p)
Adjusted diluted EPS*
increased to 8.71p (2021: 5.97p)
Two new acquisitions added to the Group
Scientific Vacuum Systems Limited & Safelab Systems Limited
Companies across the Group coped well with
challenging supply chain issues and inflation
* before reorganisation costs, share-based payments, acquisition costs and amortisation of acquired intangible assets.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Group Overview
Digital Imaging
Sensors & Control
Strategic Report 02/03
The strength of our business model:
l Federated structure allows for rapid but nuanced response
l Profitable and cash-generative businesses able to withstand external shocks
l Diverse portfolio of companies not relying on a single sector or region
l Exposure to future-proofed sectors
l Resources to invest for organic and acquired growth as opportunities arise
SDI Group Acquisition Process
Why sell to SDI ?
Main acquisition criteria
Post acquisition
l The business will retain its
independence, brands
and culture
l Scientific/technical instruments/
l Implement strong financial
manufacturing sector
controls
l Strong exporters within their
l The business is run autonomously
l Focus on growth
niche sector
l Focus on the medium- to long-
l Strong financial support
and access to specialist
resources within the Group
l Knowledge sharing within
the Group
l Profitable and cash generative
term strategy
l Strong track record
l Create an environment for the
businesses to grow and develop
with investment if required
l Strong local management team
l Available at a fair price – recent
acquisitions have been priced at
4-6 times EBIT
l SDI have a reputation of being
honourable and never changing
the deal terms
SCIENTIFIC
VACUUM
SYSTEMS
Acquired January 2022
SAFELAB
SYSTEMS
Acquired March 2022
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Strategic Report 04/05
Why invest in SDI?
l Buy and build model within life science and technology markets
l Spread of technologies and associated supply chains in diverse global sectors
l Portfolio of products for use in COVID-19 detection and treatment systems
l Fifteen earnings enhancing acquisitions since 2014
l Assembling a portfolio of businesses with niche expertise and sustainable markets
l Independent and agile operating businesses have freedom to innovate and invest for growth
Impressive Growth
Revenues (£m)
Record Performance
Adjusted Operating Profit (£m)
Strong Cash Flow
Cash Generated from Operations (£m)
Increasing Investment Returns
Adjusted Diluted EPS Figures (p)
14.7
11.7
49.7
35.1
24.5
17.4
14.5
10.7
8.5
3.1
2.3
0.8
1.3
12.1
7.7
4.6
5.2
3.6
2.5
2.9
1.3
3.43
2.83
2.30
1.61
1.55
8.71
5.97
FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022
FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
FY2022
FY2016
FY2017
FY2018
FY2019
FY2020
FY2021
FY2022
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Our Specialist Company Portfolio
Strategic Report 06/07
SDI’s
Digital Imaging
sector turnover
increased by £5.7m to
£21.5m
with organic sales
growth of 36.1%
Adjusted Operating
Profit across the seven
Digital Imaging brands
increased to £8.5m
(£5.2m 2021) up
64.6%
Digital Imaging
ATIK CAMERAS
GRATICuLES OPTICS
l Synbiosis
Synbiosis provides automated
and manual systems for
microbiological testing in food,
water, pharmaceutical and clinical
applications. Its ProtoCOL 3
system is used in all the major
pharmaceutical companies for
vaccine and antibiotic development
and its high-end system, AutoCOL
is the world’s first fully automated
colony counter.
l Fistreem International
Fistreem designs and manufactures
water purification products and
vacuum ovens. The firm’s Cyclon
Water Still and Gallenkamp vacuum
ovens are recognised as world
leading brands and are popular in
many life science laboratories.
The cameras are designed and
developed in Norwich, UK with
manufacturing based in Lisbon,
Portugal. The company has
developed and sells a range of
cameras under three brands Atik,
Quantum Scientific Imaging and
Opus Instruments
l Atik
Atik Cameras designs and
manufactures highly sensitive
cameras for life science and
industrial applications, as well as
deep-sky astronomy imaging. Its life
science cameras are in demand for
use in real-time PCR DNA amplifiers
for detecting COVID-19.
Graticules Optics is a proven world-
class designer and manufacturer of
precision micropattern products.
The firm, based in Tonbridge, Kent is
unique in offering photolithographic
products on glass, film and in metal
foil, with additional capability in
coatings, cementing, mounting and
small optical assembly.
SynOPTICS
Synoptics based in Cambridge is the
headquarters and manufacturing
site for Syngene, Synbiosis,
Synoptics Health and Fistreem
International products. It also has a
US sale and marketing office based
in Frederick USA.
l Quantum Scientific Imaging
l Syngene
Syngene develops and manufactures
systems and software for automated
gel-based DNA and protein
fluorescence/chemiluminescence
imaging and includes the popular
global G:BOX and nuGenius brands.
Quantum Scientific Imaging (QSI)
designs and manufactures a range
of high-performance cameras that
have applications in astronomy, life
sciences and flat panel inspection.
l Opus Instruments
Opus Instruments is a world
leader in the field of Infrared
Reflectography cameras for use in
the art conservation. It developed
its OSIRIS camera as a collaboration
with the UK’s National Gallery and
all its cameras including a higher
specification version of OSIRIS,
named Apollo are manufactured by
Atik Cameras.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Our Specialist Company Portfolio (continued)
Strategic Report 08/09
Sensors & Control
APPLIED THERMAL COnTROL
& THERMAL EXCHAnGE
Applied Thermal Control (ATC) is
based in Coalville and was acquired in
August 2017. Thermal Exchange (TE)
is based in Leicester and was acquired
in February 2019. We took the
decision to merge the two businesses
in December 2019 in Barrow Upon
Soar, UK. Both design, manufacture,
and supply a range of chillers, coolers
and heat exchangers used within
scientific and medical instruments.
ASTLES COnTROL SySTEMS
Astles Control Systems (Astles)
is a supplier of chemical dosing
and control systems to different
industries including manufacturers
of beverage cans, engineering and
motor components, white goods,
architectural aluminium, and steel.
The company located in Princes
Risborough, UK supplies equipment
as well as repeat revenue from
service, repairs and consumables.
CHELL InSTRuMEnTS
Chell Instruments (Chell) specialises
in the design, manufacture and
calibration of pressure, vacuum,
and gas flow measurement
instruments. Based in Norfolk, UK
the company supplies products for
sectors including aerospace,
vehicle aerodynamics, gas and
steam turbine testing, and power
generation industries.
SCIEnTIFIC VACuuM
SySTEMS
Scientific Vacuum systems (SVS)
specialises in custom Physical Vapour
Deposition (PVD) systems for the
deposition of thin film coatings
typically on semiconductor wafers,
for use in scientific research,
industrial and semiconductor
manufacturing applications.
SVS are market leaders in the
manufacture of production sputter
coaters for premium brand razor
blade coating.
SEnTEK
Sentek manufactures and markets
off-the-shelf and custom-made,
reusable and single-use
electrochemical sensors for use in
laboratory analysis, food, beverage,
pharmaceutical and personal care
manufacturing, as well as the leisure
industry. The company, based
principally in Braintree, Essex serves
global markets and has long-term
contracts to supply sensors for use in
vaccine and biologics production to
two major life science companies.
unIFORM EnGInEERInG
Uniform Engineering (Uniform) is a
manufacturer of high-quality bespoke
metal enclosures and housings used
in a variety of applications including
pharmaceutical, laboratory and
safety equipment. Uniform, based in
Highbridge, Somerset is a major supplier
of components to Monmouth Scientific,
a fellow-subsidiary of SDI. Uniform was
acquired in January 2021.
MOnMOuTH SCIEnTIFIC
Monmouth Scientific Limited
(Monmouth) is one of the UK’s
leading designers, manufacturers,
and suppliers of Clean Air Solutions.
The company specialises in Filtration
Fume Cupboard and Ducted Fume
Cupboard installations alongside
Laminar Flow and Class I/Class II
Biological Safety Cabinets. Biological
Safety Cabinets are in high demand
for use in COVID-19 testing
laboratories. Located in Bridgwater,
Somerset. Monmouth was acquired
by SDI in December 2020.
MPB InDuSTRIES
MPB Industries (MPB) designs
and manufactures flowmeters,
flow alarms, flow indicators, flow
switches, calibration cylinders and
sight glasses for the measurement
of liquids and gases by well-known
industrial and scientific users. Based
in East Peckham, UK, MPB operates
across a broad range of applications
including water treatment, oil and
gas production, medical ventilators,
medical anaesthesia, and scientific
analysis. It has been a major
contributor to the manufacture of
ventilators for the UK at the
outbreak of COVID-19.
SAFELAB SySTEMS
Safelab produces high specification
fume cupboards and similar
cabinets, for both commercial and
research laboratories and with a
special focus on the education
sector which requires versatile
and fully-featured ducted cabinets
often specified in newly built or
refurbished laboratory facilities.
Safelab’s cabinets are designed and
manufactured in a dedicated facility
in Weston-Super-Mare.
Revenues
across SDI’s eleven
Sensors & Control
brands grew from £19.3m
to £28.2m in Fy2022
an increase of
46%
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Chairman’s Statement
Strategic Report 10/11
Despite a volatile economic background and
residual COVID disruption SDI achieved another
record year, by a wide margin. The Group’s
business model has again shown resilience in these
challenging times, enabling the Group to grow sales
and profits both as the wider economy entered
the COVID-related recession and as it returned to
more normal times. The Group added two new
businesses during the year while existing businesses
within the Group also performed well, with another
year of strong organic growth.
ensure the Group has a good level
of funding available for acquiring
new companies, as well as investing
in our existing companies and
technologies.
Full-year Revenues of £49.7m have
increased by 41.6% from 2021 and
Adjusted Profit before Tax at £11.8m
is up 58.9% from the previous year.
Reported Profit before Tax has
increased by 75.1% to £9.9m. This
performance has been achieved
through an exceptional 21.6%
organic sales growth, demonstrating
again continued commercial
demand for the niche technologies
SDI provides. Particularly of note,
Atik Cameras delivered further
growth with increased deliveries
of specialised cameras providing
the sensor function for PCR DNA
amplifiers, and Astles Control
Systems enjoyed record sales of
control instrumentation for the
beverage-can-making process.
Further growth was generated by
the newly acquired businesses and
by the full year contributions of
Monmouth Scientific and Uniform
Engineering acquired in 2021.
Overall gross margin was slightly
down on last year (63.8% compared
with 65.2%) due to the increased mix
this year of Monmouth Scientific and
Uniform Engineering sales which
are at lower than our average gross
margin. We have generally been
able to pass through increasing
raw material costs. Our overheads
have increased compared with
last year given an increase in sales
activity and selected investments to
facilitate growth. Our experienced
business managers remain focused
on delivering products and
services that represent good value
to our customers while earning
an appropriate return for our
shareholders.
Cash flow has also been excellent,
and metrics relating to returns on
capital employed are also at record
high levels.
Group
Revenues (£m)
Profit
before Tax (£m)
49.7
+41.6%
35.1
5.9
9.9
+75.1%
FY2021
FY2022
FY2021
FY2022
Ken Ford
Performance
On 5 January 2022, we completed
the acquisition of Scientific Vacuum
Systems (“SVS”), a UK manufacturer
of physical vapour deposition
equipment. On 24 March 2022
SDI acquired Safelab Systems
(“Safelab”), a UK manufacturer of
fume cupboards. These businesses
will be operated separately from
our existing businesses. While SVS’s
technology and markets served
are mostly unrelated to our current
portfolio, Safelab operates in a
market with which we were already
familiar. Both, however, fit perfectly
within our acquisition criteria, and
have become part of our Sensors
and Control segment. Additionally,
in August 2021 Monmouth Scientific
acquired the trade and assets of the
Clean Tent business of Moorfield
Nanotechnology, for consideration
of £150,000. Total consideration
for the acquisitions is forecast to
be approximately £12.0m, net of
cash. We warmly welcome our new
colleagues to the SDI Group.
These acquisitions were funded
from cash and existing debt facilities.
Both companies are profitable and
contribute to earnings immediately,
and indeed have performed very
well since joining the Group. SDI’s
continuing strong cash generation,
along with its borrowing facilities,
SDI Group plc Annual Report 2022
Strategy
The Group’s successful buy and
build strategy is unchanged. We
will continue to seek targeted
acquisitions, funded by earnings
and cash flows from our existing
businesses where possible. The
Group’s policy is to acquire small/
medium-sized companies within
the science and technology sectors
with a manufacturing bias. We seek
to acquire businesses with high-
quality, niche technologies that have
sustainable profits and cash flows and
the potential to grow.
We continue to service many sectors
with SDI products, particularly in the
life sciences and medical sectors. Our
exposure to discretional consumer
spending is limited. Our sales directly
to government entities are not
high, but government spending in
healthcare and scientific research
underpins a significant portion of
our sales. Demand for Atik cameras
for use in the fight against the
COVID-19 pandemic continued
strongly throughout this financial
year and remains robust into the new
financial year. We are confident that
the demand related to the current
pandemic will be replaced over time
by demand for similar products in the
broader life sciences domain.
To ensure we maintain the right level
of operating capital and funding
available for acquisitions, the Board
has again decided not to pay a
dividend this financial year but will
keep this under review.
Corporate Governance
The Board takes its governance
responsibilities very seriously. Our
approach to our wide range of
responsibilities is set out in the
Corporate Governance section of
our Annual Report, and as we grow,
we expect to continuously improve
governance towards the best practices
required of a larger company.
Further detail on Corporate
Governance is available on the
Group’s website www.sdigroup.com/
investors/governance
The Board, in common with our
wider team and other stakeholders,
is determined that the Group play its
part in addressing climate change,
and indeed that we reap the benefits
of being part of the solution. We wish
to avoid, however, both pointless
box-ticking, where possible, and
exaggerated claims. We are proud of
the actions taken so far, and our focus
is on taking tangible steps to reduce
our carbon footprint and that of our
products and services.
Average Employee numbers
Headcount 2021 –272
Headcount 2022 –354
Board
Outlook
The Board of Directors remained
unchanged throughout the year.
Our CFO Jon Abell advised in
January that he wished to retire in
the Summer of 2022, and the Board
followed a thorough process led by
the Nomination Committee, leading
to the hiring of Ami Sharma as his
successor starting in August. Jon’s
contribution to the development and
growth of the SDI Group over his
tenure has been fundamental.
Isabel Napper has also decided to
step down as non-executive director,
which will be in August 2022 and the
hiring process to find a replacement
is well advanced. We wish Jon and
Isabel all the best for the future.
Team
SDI now employs over 400 staff
across its companies. Their skills and
experience are key to the long-term
sustainability of our businesses. To
deliver another record year would
not have been possible without their
hard work and flexible approach as
we return back towards normality.
We operate with caution and
discipline to protect our teams
of employees and we offer our
appreciation and thanks to them
for their hard work and dedication
throughout the year.
Over the last seven years, since
the Group’s buy and build strategy
gathered pace, the Group has
grown its turnover from £8.4m
to £49.7m and its reported profit
before tax from £0.5m to £9.9m,
through the excellent execution of
a proven value-creating business
model. While increasing shareholder
returns consistently and substantially,
we have also built capacity and
capability to enable future growth.
The key growth drivers within our
business remain organic growth
and growth through acquisition.
The Group is in a very strong
financial position and has the
resources and flexibility to support
these key drivers. While mindful of
the potential for further macro-
economic turbulence and despite a
challenging external environment,
FY2023 has begun well.
Ken Ford
Chairman
21 July 2022
SDI Group plc Annual Report 2022
Chief Executive Officer’s Report
Strategic Report 12/13
cancellations, face-to-face customer
access difficulties and ongoing supply
chain challenges, with difficulties
in accessing some components at
any cost and large price increases
demanded for others in short supply.
Customers resumed buying, and
while the exceptional demand at
MPB and Monmouth Scientific was
no longer there, demand for cameras
supplied into the PCR testing market
remained high.
Against this background, I am
pleased to report that our very
flexible structure and the dedication
of our staff across the Group have
allowed us to maintain our growth
rate, already strong in 2020-21 and
previously, and we are reporting
again record financial results.
Revenues and Profit
Overall revenues grew by 41.6%, of
which 21.6% was organic growth
and 20.0% was from the full year
impact of the 2020-21 acquisitions
of Monmouth Scientific and
uniform Engineering and from the
contributions of Scientific Vacuum
Systems and Safelab acquired in
the year. Adjusted Operating Profit
grew by 56.8%, mainly resulting
from the organic sales growth.
SDI’s digital imaging segment
delivered 36.1% organic sales
growth, with revenues at £21.5m
and Adjusted Operating Profit at
£8.5m, up 64.6%. At Atik Cameras,
sales of cameras for PCR machines,
previously expected to be essentially
one-off due to COVID-19 demand,
increased further, and in fact they
are now expected to continue at
least for the first half of 2022-23.
At the same time, demand from our
other camera customers has been
recovering over the course of the
year. Graticules Optics also achieved
record sales, while sales at Synoptics
were flat overall but 3% higher than
in 2019-20.
The sensors and control segment
grew sales by 46.0%, to £28.2m.
Organic growth was 9.7%, and
the remaining 36.3% growth was
from the acquisitions of last year
and this year. Adjusted Operating
Profit grew 19.4% to £5.2m. Astles
Control Systems grew substantially
over the previous year, with a
partial recovery of its global service
revenue and very strong sales of
equipment into new aluminium can
production lines (linked to a slow
transition away from plastic bottles).
Sales of scientific and industrial
chillers at ATC and of chemical
sensors at Sentek saw good growth
(last year they were flat on the
previous year). MPB sales were
slightly lower, without the benefit
of sales of flowmeters for medical
ventilators but were 13% higher
than in 2019-20. Sales at Chell
Instruments were also lower than in
2020-21 when they benefited from
a large equipment order received
pre-pandemic. The level of sales
at Monmouth Scientific, acquired
in December 2020, continued at
a high level, although the mix in
demand has shifted away from
standard biological safety cabinets
(used to ensure operator safety
and reduce contamination in
COVID-19 test equipment) towards
a more normal mix of custom/
modular fume cupboards, laminar
flow cabinets and cleanrooms.
Both Scientific Vacuum Systems
(acquired in January 2022) and
Safelab Systems (acquired in March
2022) delivered revenues and
profits which were consistent with
our modelling at the time of their
acquisitions.
Basic earnings per share increased
by 56.5% from 4.81p to 7.53p; fully
diluted earnings per share also
improved by 57.9% to 7.23p
(2021: 4.58p).
Mike Creedon
Our financial year from May 2021 to
April 2022 coincided with the second
year of the COVID-19 pandemic,
under which most restrictions to
normal life and work were lifted in
the UK (with limited and temporary
restrictions put back in place for the
milder Omicron wave), and from
February 2022 the start of the Ukraine
conflict (which has had limited impact
on the Group).
In the previous year (2020-21),
while all of our businesses had
remained in production throughout,
with some exceptions where their
customers reduced their purchases,
and all businesses had to cope with
uncertainty, logistics challenges,
employee safety and well-being
concerns, and travel restrictions. The
exceptional cases, notably at our MPB
and Atik Camera businesses, and at
Monmouth Scientific (acquired in
December 2020), had additionally the
welcome challenge of significantly
increased demand for products
related to the diagnosis and treatment
of COVID-19.
This financial year (2021-22) was
thus characterised by a substantial
progression towards normality,
although certainly tempered by
persistent travel restrictions (especially
outside of Europe), trade fair
We are
Engineering
Change...
SDI’s two new
acquisitions, Scientific
Vacuum Systems and
Safelab Systems, have
great potential for
growth. Their products
are at the forefront of
technological innovation
and perform vital roles
within their own
specific markets.
SVS specialises in
custom Physical Vapour
Deposition (PVD) systems
for the deposition of thin
film coatings, typically on
semiconductor wafers
(shown here) used in
scientific, industrial
and manufacturing
applications.
SDI continues to bolster it’s strong financial performance, delivering on
its strategy and its objectives. It identifies and acquires businesses that
have strong management structures, niche products and that would
benefit from the expertise and investment that the Group can provide.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Chief Executive Officer’s Report (continued)
Strategic Report 14/15
Getting the
Chemistry
Right...
The image shown here,
illustrates the SVS
DCMS30 Deposition
System, designed
to improve the
manufacturing efficiency
and speed of razor blade
production by coating
them with a variety
of materials including
Chromium, Tungsten,
and Titanium.
Safelab’s fume cabinets
and cleanroom
equipment (shown
right) perform critical
roles in many leading
laboratories, helping
to keep the UK at the
leading edge of
scientific research.
Acquisitions
The UK is a centre of excellence
for product innovation and
manufacturing with many world-
leading businesses operating in life
science and technology niches. As
a buy and build group, finding those
businesses with niche capabilities is
key to our success. The SDI Group
has a reputation as a supportive
owner that invests to improve staff
expertise and facilities, as well as
trusting subsidiary management
teams with their day-to-day
operations. This approach has
allowed companies in our group
to upgrade capacity, efficiency and
safety in their manufacturing facilities
and their businesses to thrive.
This year we have focused much
attention on embedding last year’s
acquired businesses into the Group,
and we have acquired two additional
high-quality and profitable UK-
based businesses, extending our
technology and customer base and
providing further scope for future
organic growth.
On 5 January 2022, the Group
acquired 100% of the share capital of
Scientific Vacuum Systems Limited
(“SVS”), for total consideration
estimated at £5.5m, of which £4.5m
has been paid in cash and the
remaining £1.0m is contingent on
SVS achieving expected profit for
the year to 30 September 2022.
On the date of the acquisition,
SVS had £1.25m of cash in
hand. SVS specialises in custom
Physical Vapour Deposition (PVD)
systems for the deposition of
thin film coatings typically on
semiconductor wafers, for use in
scientific research, industrial and
semiconductor manufacturing
applications, and is the market
leader in the manufacture of
production sputter coaters for
premium brand razor blade
coating. SVS brings considerable
technology and engineering
expertise to the Group in high
vacuum and PVD applications,
as well as blue chip customers,
and may be a springboard for
future acquisitions. SVS is based in
Finchampstead, Berkshire.
On 24 March 2022, the Group
acquired 100% of the share
capital of Safelab Systems Limited
(“Safelab”) for £8.5m (including
£0.2m in SDI Group shares, £5.9m
in cash paid before the year end
and £2.4m in cash paid after the
year end). On the date of the
acquisition, Safelab had £0.8m
of cash in hand. The company
owns its main manufacturing
building valued at £1.4m. Safelab
produces high specification fume
cupboards and similar cabinets,
for both commercial and research
laboratories and with a special focus
on the education sector which
requires versatile and fully featured
ducted cabinets often specified in
newly built or refurbished laboratory
facilities. Safelab is based in Weston-
Super-Mare. The acquisition follows
the Group’s December 2020
acquisition of Monmouth Scientific
which manufactures clean rooms,
fume cabinets and safety cabinets
and is based in Bridgwater. The
Group will maintain the identity
and autonomy of both companies
in their current locations, but the
businesses are actively seeking and
finding areas of co-operation to
reduce costs and enhance their
total customer offer. Our Uniform
Engineering business is a supplier
of sheet metal fabrications to both
Monmouth Scientific and to Safelab.
We have funded the cash elements
paid for both acquisitions from our
existing cash resources and from our
revolving credit facility with HSBC
UK Bank. The acquired companies
contributed £1.7m of revenues to
the Group this year and as expected,
both acquisitions have been earnings
enhancing to the Group in 2021-22
immediately following initial
acquisition-related costs.
We have a clear development strategy and our success comes from
our culture, which fosters creativity, teamwork and co-operation
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Chief Executive Officer’s Report (continued)
Strategic Report 16/17
...with the Right
People, Products
& Performance
Operations
We have now learnt to live with the
pandemic, and although enhanced
safety measures are still in place
and some staff work some of their
days from home, our focus across
the Group is very much on working
closely together and with our
customers to build for the future.
In common with manufacturing
industry across the world, and
perhaps especially in the UK
following Brexit, the pandemic
is causing supply chain issues to
all of our businesses, and a tight
labour market is further forcing
cost increases which have recently
been compounded by the impact of
Russia’s invasion of Ukraine. We have
been delighted with the response
from our businesses’ management
and staff who have worked tirelessly
to find solutions to component
shortages, and the results can be
seen in our record levels of sales and
profit. We now look forward to an
expansion of new product launch
activity, by our customers and by our
own businesses, and we believe this
brings the Group new opportunities
to gain market share following a
period in which the focus has been
on supplying existing products.
Our rolling programme of
upgrading manufacturing facilities
across the Group continued
with the completion in March of
the consolidation of Monmouth
Scientific’s production and
administration activities from several
buildings to a single purpose-
built site in Bridgwater, the start
of a substantial refurbishment of
the Graticules Optics factory in
Tonbridge, and the doubling of
engineering and manufacturing
space at Astles Control Systems
in Princes Risborough. Such
investments typically have a very
good payback, as they are justified
by the capacity increase but bring
many other benefits including
efficiency, staff comfort, product
quality and image.
While face-to-face sales activity,
including trade fairs and exhibitions,
remained difficult (although it
has picked up substantially in the
last couple of months), we have
continued to make good progress
with website enhancement, on-line
sales, virtual selling techniques and
social media activity, and we have
been able to leverage our capability
across the Group.
During the 2020-21 year at
Atik Cameras, we strengthened
the management team at both
company sites, near Norwich for
overall business management,
sales and marketing and research
and development, and near Lisbon,
Portugal, for manufacturing,
logistics, account management
and finance. During the 2021-22
year, we have further developed the
organisation so that all invoicing to
customers is now direct from our
Portuguese operation and the UK
organisation provides management,
sales and marketing and R&D
services to Portugal. This has been
very well received by customers.
When acquiring businesses, it is
imperative for us that they have a
strong management team usually
led by the founder of the business.
This year two of our managing
directors decided to step down
but I am pleased to say, still
continue in consultancy roles. Steve
Chambers, one of the founders of
Atik Cameras, stepped down at the
beginning of April 2022. He was
replaced by Panos Kapetanopoulos,
who was the R&D director. David
Pomeroy decided to step down
in December 2021 at Monmouth
Scientific and was replaced by
Alan Holcombe, who also remains
Managing Director at Uniform
Engineering. I wish Panos and Alan
well in their new roles and am certain
they can be successful with the
support of the SDI directors and their
fellow subsidiary directors.
Cash and Liquidity
SDI has a strong balance sheet with
current year-end gross cash at more
than £5.1m, and £16.0m of undrawn
bank facility, which remains available
(unless extended) until November
2024. The Group therefore has
sufficient funds that can be used, with
its steady cash flow, to acquire new
companies and invest in our current
portfolio of profitable businesses.
Trading Outlook
Our businesses remain busy, and
several are operating at full capacity
with their current staffing. Finding
good staff and circumventing supply
chain issues are now part of daily
business, and our managers have
demonstrated their ability to solve
these challenges and more.
We have budgeted for organic
growth, and, although mindful of a
possible consumer-led recession
and levels of inflation that have been
absent for many years, we have had
a good start to the 2022-23 financial
year and are confident that we can
continue to trade profitably over the
coming months.
The market for acquisitions appears
buoyant, and SDI expects to acquire
additional businesses in the 2022-23
financial year.
Mike Creedon
Chief Executive Officer
21 July 2022
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Chief Financial Officer’s Report
Strategic Report 18/19
SDI Group revenues for the year were £49.7m,
compared with £35.1m in 2020-21, an increase
of 41.6%. Sales growth from acquired businesses,
including sales of Monmouth Scientific and
of Uniform Engineering in the periods to their
acquisition anniversaries and post-acquisition sales
of Scientific Vacuum Systems and Safelab Systems,
contributed £7.0m, while organic sales growth
was £7.6m or 21.6%. This builds on top of organic
sales growth in 2020-21 of 19%.
Gross profit increased to £31.7m
(2021: £22.9m), with margin
reduced to 63.8% (2021: 65.2%)
due to significant product mix
changes including lower than
average gross margins at recently
acquired companies.
Operating profit for the year was
£10.2m (2021: £5.9m) and Adjusted
Operating Profit (AOP) was £12.1m
(2021: £7.7m) before reorganisation
costs, share-based payments,
acquisition costs and amortisation
of acquired intangible assets,
an increase of 56.8%. Significant
drivers of the increase were the
organic sales increase, plus the
added contributions of the
acquired businesses.
Investment in R&D
Under IFRS we are required to
capitalise certain development
expenditure, and in the year ended
30 April 2022, £0.4m (2021: £0.4m)
of cost was capitalised. Much of the
work of our growing R&D teams
does not qualify for capitalisation
and is charged directly to expense.
Amortisation for 2022 were £0.4m
(2021: £0.4m). The carrying value of
the capitalised development at 30
April 2022 was £0.9m (2021: £1.0m)
to be amortised over 3 years.
Reorganisation
The Board carried out a thorough
review of the operations and cost
structure of the Group and this
gave rise to £0.1m (2021: £0.1m)
of reorganisation costs in the year,
which should bring benefits in the
current year.
Acquisition Costs
The Group incurred costs of £0.3m
(2021: £0.2m) in relation to stamp
duty, legal fees, and other advisor
remuneration for the acquisitions
completed in the year.
Financing
Financing costs totalled £0.3m
(2021: £0.3m), including interest
costs estimated within leases.
Taxation
Taxation charge for the year was
£2.3m (2021: £0.9m). Included in the
charge is £0.7m representing
the increase in net deferred tax
liabilities due to the enacted change
in UK taxation rates (from 19% to
25%) in force from March 2023.
The remainder of the increase
results mostly from increased
profitability. Excluding the rate
change on the deferred tax position
the net tax rate was 16.3% (2021:
16.6%). The Group continues to
benefit from R&D tax credits.
Jon Abell
Revenue and Profits
From the outset of the COVID-19
pandemic, in 2020-21, our Atik
Cameras business received
substantial orders from an existing
OEM customer for cameras
designed into the customer’s
PCR instrument. At the time, we
considered these to be one-off
orders, and we viewed follow-on
orders from the same customer
in the same light. Further and larger
orders have followed in the 2021-22
year, and sales are continuing at a
high rate in 2022-23. The expansion
of Atik Cameras sales represents
a large proportion of the Group’s
organic sales growth in both
years. We can no longer consider
these sales to be one-off, but it
is also prudent to assume that at
some point the demand for PCR
instruments will normalise at a
lower level. However, having
demonstrated the efficacy and
competitiveness of its camera, we
also expect Atik to successively
pursue a wider market for its
products. Organic growth from
other portfolio companies
averaged 9%.
Revenue Bridge (£m)
7.6
49.7
5.3
1.7
35.1
Sales 2021
2021
acquisitions
2022
acquisitions
+21.6%
Organic
growth
Sales 2022
Our investment in fixed assets
increased to £1.4m (2021: £0.6m)
with significant investments in
company-owned fixtures to our
new leased building at Monmouth
Scientific and at Graticules Optics.
As in prior years, our biggest
investment was in the acquisition
of new businesses, with £12.0m
deployed on a cash-free basis
(including contingent consideration)
of which £0.2m in shares (2021:
£6.6m of which £0.2m in shares).
At the end of the year contingent
consideration of £3.4m was
outstanding (2021: £2.35m), of
which £2.4m has been paid since
the end of the year to the sellers
of Safelab Systems and £1.0m
remains outstanding relating to the
acquisition of SVS, to be settled after
30 September 2022.
Funding
Our investments were financed out
of our own cash flow, except for
the issue of 117,716 shares valued at
£200,000 as part payment for our
Safelab Systems acquisition. Having
started the year with net cash of
£0.7m (£3.8m of cash less £3.1m of
bank loans) we closed the year with
net cash of £1.1m (£5.1m of cash less
£4.0m of bank loans).
On 1 November 2021 we renewed
and expanded our committed loan
facility with HSBC from £7.4m to a
£20m revolving loan facility, with
a further accordion option of an
additional £10m (at the discretion
of HSBC), and with repayment date
of November 2024 extendable for
two further years. The new facility
has been tailored to our business
model with fewer restrictions on
acquisitions and allows for higher
leverage if necessary.
Jon Abell
Chief Financial Officer
21 July 2022
Earnings per Share
Diluted earnings per share for the
Group was 7.23p (2021: 4.58p).
Adjusted diluted EPS, an alternative
performance measure which
excludes certain non-cash and
non-recurring expenses was 8.71p
(2021: 5.97p), an increase of 45.8%.
Cash Flow and Working
Capital
During the year the Group
generated cash from operations
of £14.7m (2021: £11.7m). In the
prior year, we benefited from an
increase of £3.2m in customer
advanced payments received,
largely related to COVID-19 related
contracts in Atik. The balance of
these is £1.5m lower at 30 April
2022 compared with a year ago.
Taxes paid have increased to £1.3m
(2021: £1.2m). The lower payments,
relative to £2.5m taxes charged to
the income statement, result partly
from the tax deductions available
to the Group on exercise by
directors and employees of share
options. As noted above, taxes on
the income statement also include
a £0.7m non-cash charge to
update deferred tax balances to the
enacted future UK tax rate of 25%.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Strategy & Key Performance Indicators
Strategic Report 20/21
Key Performance Indicators
A range of financial key performance
indicators are monitored for each
business and for the Group as a whole
on a monthly basis against budget
and over time 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.
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, and 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 continue to buy stand-
alone businesses as well as smaller
entities and technology acquisitions
which bolt onto our existing ones.
Our track record over the last eight
years has been good, with fifteen
businesses acquired across our
digital imaging and sensors and
controls segments.
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, which we encourage.
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.
United Kingdom
Europe
America
China
Asia (excluding China)
Rest of World
Revenue by Destination of External Customer (£’000)
2022
1,269
2021
1,289
4,652
3,088
10,798
21,330
6,854
15,343
4,226
7,381
3,365
5,137
Revenue Total 49,656
Revenue Total 35,076
Revenue by Sector (£’000)
Digital
Imaging
Sector
FY2022
21,492
Sensors
& Control
Sector
FY2022
28,164
SDI Group 7-year Share Price Performance
200
150
100
50
0
30/04/15 30/04/16
149p
7.5p
30/04/17
30/04/18
30/04/19 30/04/20
30/04/21
30/04/22
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Section 172(1) Report
Strategic Report 22/23
Statement by the directors in
performance of their statutory
duties in accordance with s172(1)
of the Companies Act 2006
When making decisions, the directors
of SDI Group plc must act in the way
they consider, in good faith, would be
most likely to promote the success
of the Company for the benefit of its
members as a whole (having regard
to the stakeholders and matters set
out in s172(1)(a-f) of the Companies
Act 2006).
The directors are committed to
developing the Group to create value
for shareholders over the long term
and believe that attention to the
interests of all stakeholders will
provide the best platform for
sustained value creation.
Here we provide some detail regarding
our engagement with key stakeholders,
our understanding of their interests,
and our actions and decisions taken
which may affect them.
Shareholders and their
Representatives
SDI Group plc is quoted on the AIM
market and has shareholders ranging
from investment funds and high net
worth individuals to retail investors,
directors and employees and
former employees. All shareholders
are entitled to share equally in the
Group’s success, and we aim to
provide all with the information they
need to understand the progress of
their investment. We believe that a
mixed shareholder base provides
benefits to all in maintaining liquidity
in the shares.
In addition to public announcements
made, directors meet from time
to time with some of the Group’s
larger shareholders and potential
shareholders to discuss the state of
the Group, usually following annual
or interim results announcements
and with the presence of our
Nominated Advisor. These meetings
are important in providing large
investors with comfort for their
investment decisions and are
for many a requirement prior
to investing. These meetings
may be held face-to-face or by
videoconference.
In recent years, we have provided
via a videoconference platform the
same presentation to members of
the public, with the opportunity
to ask questions of the presenting
directors, and this has enjoyed
a good level of attendance. We
also welcome requests from all
shareholders to speak with directors,
and we will usually be able to
accommodate that.
These meetings do not give
attendees any insider information
and presentations made are excerpts
from publicly available documents
such as this Annual Report.
Directors may occasionally consult
with some of our larger shareholders
on matters of executive benefits, to
ensure that these are aligned with
the expectations of the market.
The directors keep the payment of
a dividend under review. We are
aware that different shareholders
(and current non-shareholders) may
have different dividend appetites,
and we cannot please everyone.
Our judgement to date has been
that, as a growth company with
a track record of creating value
through acquisitions, funds were
better reserved for investment.
Customers and Suppliers
SDI Group is organised as a
constellation of individual operating
businesses, each with its own
general management, and customer
and supplier bases. Our engagement
with customers and suppliers
generally takes place within those
businesses. Some customers and
suppliers are common to several
of our businesses, although we
may deal with different divisions
of the same group. The directors
encourage our businesses to deal
correctly with their customers and
suppliers, and to look for long-
term relationships that can add
value to all parties. Our businesses
report on key relationships to our
executive directors and in their
reports to the wider Board, and we
look for opportunities to expand our
relationships with good customers
and suppliers across the Group.
During the course of the COVID-19
pandemic, the Group took specific
care to pay its suppliers to agreed
terms in order to provide certainty
during the pandemic.
We aim to develop new products
and technologies that satisfy future
customer needs and provide the
highest quality and most reliable
products for the markets we serve.
Employees
Acquisition Partners
For SDI Group, acquisitions are not
one-time events, but a repeatable
process. We seek to make the
process as easy as possible for
sellers and for their advisors to
realise their goals. Our management
of the businesses post-acquisition
is also a key factor in enhancing our
reputation as a good acquirer. By
treating sellers openly and fairly, and
by executing on our commitments,
we seek to remain the acquirer of
choice for businesses that will fit well
into the Group.
Our business is built on the hard
work, knowledge, skills and
experience of staff across the
Group. We expect them to go the
extra mile in looking after our other
stakeholders, and they do so. Our
commitment is to look after them
fairly, both in economic terms and
in providing a stimulating working
environment where they can use and
develop their capabilities to the full.
Executive directors of SDI Group
engage with employees across the
Group during regular visits to all
locations, and the Board’s policy is
to rotate its meetings around the
locations so that all directors can
meet with staff. The Board receives
monthly reports from the Group’s
operating businesses which include
sections on staffing matters and
reserves specific agenda slots for
staff and health and safety matters at
each regular meeting.
Key staff remuneration, and
remuneration policy for the wider
Group, is decided by directors,
and our aim is to pay people
competitively and provide additional
reward for exceptional performance.
The culture at SDI Group, as
experienced by our staff, is
generally that of a successful
small business, which is the recent
history of each of our operating
businesses. As part of the SDI Group,
however, opportunities for career
development and learning from
other businesses can be enhanced,
and we look for ways to develop
our staff across the Group. Staff in
our operating businesses are also
interested and informed about the
activities and performance of the
wider Group.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Environmental, Social & Governance
Principal Risks & uncertainties
24/25
Sustainability is at the core of all that we do
SDI Group is here for the long term.
Our directors expect it will long
outlast them, and our owners should
know that most of its value lies
beyond the forecastable horizon.
We believe that our business
model can progress and develop
indefinitely, subject to our nurturing
the stakeholders that help make
us successful. We would like those
stakeholders to remain with us for a
long time on our journey.
Consequently, sustainability is not just
on our agenda, it is our agenda.
The Environment
SDI Group recognises that the
significant environmental challenges
facing the world, including man-
made climate change, deforestation
and habitat loss, and water quality and
availability, must be addressed by all
businesses worldwide. We understand
that our trading activities have an
environmental impact and that we
must make real changes to reduce
any negative impact.
SDI’s current businesses are not big
polluters, and we do not expect
to acquire businesses that have a
significant carbon footprint, in keeping
with our sustainability agenda. At
the same time, we believe that our
businesses can and do contribute
to reducing society’s environmental
impact by providing technological
products that are more accurate,
consume less energy and other
inputs, and enable better science than
those available in the past. We can be
proud of the portfolio, but we must
continue to innovate.
In keeping with our devolved
operating model, our actions to
mitigate, improve and innovate our
environmental impact take place
within our businesses, which respond
to the demands of the markets
they operate in, to their customers,
their employees and their local
communities, all of whom have a stake
in a more sustainable future. Initiatives
implemented in the last year have
included the installation of solar panels
at Monmouth Scientific’s new factory.
SDI operates a flat structure, and we
do not currently attempt to track and
consolidate environmental KPIs across
the group as this would be a significant
escalation of reporting requirements
for little, if any, environmental impact.
Our HQ role is one of encouragement
and idea-sharing, and of approving
investments whose sustainability
impact may not be fully quantified
financially. This may have to change
in the future if SDI is covered by
additional reporting requirements.
Social Matters
SDI Group seeks to provide, in its
businesses, a challenging, enjoyable,
safe and caring environment for
its employees, so that they can
contribute, develop and remain with
the Group for the long term.
We comply with all relevant
legislation, obviously including:
l Health and safety, where the Board
reviews monthly reports from all of
its businesses to ensure root causes
of any issues are addressed.
l Anti-bribery and corruption. The
Group operates on an ethical basis
in all of its activities and takes all
reasonable steps to ensure bribery
and corruption are prevented by
those working for the Company or
associated with it, including third
parties and agents.
l Equal opportunities. SDI Group
is a committed equal opportunity
employer. We endeavour to treat
all employees equally and fairly and
encourage them to apply these
principles themselves. We support
staff training, appraisals and
personal development and we
seek to maintain a good working
environment. We use professional
advisors to ensure our personnel
practices are up to date with legal
requirements.
l Disabilities. The Group gives
full and fair consideration to
applications for employment
from disabled persons where
the requirements of the job
can be adequately fulfilled by a
handicapped or disabled person.
Employees who become disabled
are provided, where practicable,
with continuing employment
under normal terms and
conditions and are provided with
training and career development
where appropriate.
l Modern slavery and human
trafficking. The Group does not
tolerate any kind of coercive
labour practices and strictly
adheres to standards required
under all relevant employment
legislation.
We are mindful that the way we
operate our existing businesses and
treat our employees influences our
attractiveness as an acquirer of new
businesses, and provides a strong
differentiator against competing
trade or financial bidders.
Governance
Governance matters are discussed
as required in the relevant section
of this report. The Group’s aim is to
always act responsibly, ethically and
in the protection of shareholders’
and other stakeholders’ interests, and
to continue to review and evolve its
governance processes as it grows
in advance of expectations without
simply ticking the box.
The following represent, in the
opinion of the Board, the principal
risks and uncertainties of the business.
It is not a complete list of all the risks
and uncertainties, and the priority,
impact and likelihood may change
over time.
Acquisitions
Acquisitions are a key element of our
strategy, and the failure to identify and
prosecute acquisition opportunities
would impact future growth in
profit and share price. The Group
spends significant time and energy in
identifying acquisition opportunities
and receives suggestions from various
sources as well as directly or through
our own businesses and management.
These are carefully filtered, and the
most attractive ones are managed to a
possible successful conclusion.
An additional important risk is that
an acquisition does not provide the
financial return expected. The Group’s
disciplined due diligence process
helps to avoid this, but the Group
is also able to marshal resources
in support of an acquired entity’s
management team to help them
improve performance as necessary.
Dependence on key distributors
and OEM customers
Failure to effectively manage
our distribution channels could
damage customer confidence and
adversely affect our revenues and
profits. Additionally, in several of our
businesses, significant amounts of our
sales are to a small number of OEM
customers, and any reduction in their
end product sales or in our share of
their purchases would impact our
revenues and profits.
In order to mitigate this risk the Group
dedicates significant resource to
maintaining close relationships with
our distributors and OEM customers,
including at Group level, and we aim to
provide them with products and service
that match their needs.
Competition and technological
obsolescence
Competition from direct competitors or
third-party technologies could impact
upon our market share and pricing.
In order to mitigate this risk the Group
continues to invest in researching its
markets and continues to offer new
products in response to changing
customer preferences. In addition,
the Group invests in research and
development to maintain its
competitive advantage.
Supply chain failures
Recent events including Brexit, the
COVID-19 pandemic and the Russian
invasion of Ukraine have combined to
make supply chain robustness a key
competitive advantage. There may be
further logistical disruptions resulting
from the reconfiguration of borders,
possibly combined with other supply
chain disturbances due to the COVID-19
pandemic, shipping issues, ransomware
and geopolitical events.
The Group has taken appropriate steps
to minimise disruption, including some
expansion of stocks, and has cooperated
with customers to ensure continuity
of their supply chain. The Group has
also conducted a detailed review of the
robustness of cyber security measures
which has resulted in investment in
more robust systems and procedures.
Recruitment and staffing
If the Group fails to recruit and retain
individuals with the appropriate skills
and experience its performance may
suffer. To ensure the Group retains the
highest calibre staff it has implemented
a number of schemes designed to
retain key individuals, both financial and
non-financial, including bonuses and
share option schemes.
COVID-19
The effects of COVID-19 have reduced
over recent months but this is not
uniform across the world and there is
a risk that future developments do not
follow the same course as those seen in
earlier phases, and that sales orders
are reduced, production operations
are disrupted, or supplies of key
components are interrupted.
Over the course of last year and
2020-21, each of SDI’s businesses has
been profitable and cash-generative,
and this suggests that the business
model of SDI Group is resilient to
similar risks. The Group remains alert
to continuing risks.
Currency and foreign exchange
As with the majority of international
companies, the Group’s UK and
overseas businesses purchase goods
and services and sell some of their
products in non-functional currencies.
Where possible, the Group nets such
exposures or keeps this exposure to
a minimum. The Group’s principal
exposure is to US Dollar and Euro
currency fluctuations against Pound
Sterling, and in both currencies, we
sell more than we purchase and we
have a higher level of debtors than
creditors. This typically means that
a relative devaluation of the Pound
results in exchange gains and an
improvement in competitiveness,
whereas a revaluation has the
opposite effects.
We have never hedged our exposure
using financial derivative products,
but we do have some activity in both
Europe and USA, including a factory in
Portugal, which acts a partial natural
hedge. However, we have established
a procedure for the approval of simple
hedging transactions if conditions
require them. We keep cash balances
in Euros and Dollars to a minimum
and may take out loans under our
revolving credit facility in Euros and
Dollars, to reduce our net exposure
to those currencies. If the Pound
strengthens significantly, we will
review all opportunities to realign our
costs to the changed circumstances.
Liquidity
A review of the Group’s exposure to
liquidity risk is provided in note 26.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Our Directors
Corporate Governance Statement
26/27
Ken Ford Chairman
Chairman’s Introduction
Ken joined the Board in 2010 and became Chairman in 2012. He was previously Chief Executive
of Teather & Greenwood, the investment bank, and brings over 36 years of City experience to the
Company, including a strong understanding of shareholder value, strategic planning and corporate
transactions. His previous roles include Aberdeen Asset Management, Morgan Grenfell and Wedd
Durlacher. Ken is currently non-executive Chairman of Gear4music and CMO Group plc both of which
are AIM-listed. He is a Fellow of the Chartered Securities Institute.
Mike Creedon Chief Executive Officer
Mike joined the Board in 2010 as Finance Director, and was appointed CEO in 2012, maintaining also
the Finance Director role until July 2018. A Chartered Certified Accountant with an MBA from Henley
Management College, Mike brings to SDI considerable experience of working within quoted companies
and technology businesses, and fundraising, mergers and acquisitions. In particular, he has recent
experience of AIM-listed technology companies.
Previous Finance Director posts include Ninth Floor plc and Ideal Shopping Direct Limited.
Jon Abell Chief Financial Officer
Jon joined the Board in July 2018 and has over 35 years of business experience. Prior to joining SDI,
he was Divisional VP of Finance, Electronic Instruments Group at Ametek, Inc. where his principal
duties include performance management, M&A, business controls and accounting for several scientific
and industrial instrument businesses.
Jon started his career with industrial companies in the UK and in Italy, before obtaining his MBA at
Columbia Business School in New York. He subsequently went on to senior financial management
roles in Germany, the Netherlands, USA and UK including at Philips Electronics and Broadcom Inc.
Jon announced in January 2022 his decision to retire from the Board in the Summer of 2022.
Isabel napper Non Executive Chair of the Remuneration and Nomination Committee
Isabel joined the Board in February 2017 and has more than 25 years’ experience in advising clients in
the technology and healthcare/life science areas, both public and private sector, leading on business
development and managing regulatory issues, governance risk and strategic change. Isabel was
previously a Partner at the law firm Mills & Reeve where she acted as legal adviser and company secretary
to a number of boards. Her extensive business development and marketing skills have been invaluable to
the Board. Isabel is also a non-executive director at Tristel plc and Keystone Law group plc.
Isabel has announced that she will step down from the Board in August 2022.
David Tilston Non Executive Chair of the Audit Committee
David joined the Board in July 2017. He is a Fellow of both the Institute of Chartered Accountants in
England and Wales and the Association of Corporate Treasurers. He has over 30 years’ experience in
finance functions within public companies, including at Group CFO level, most recently at Northgate
plc and Consort Medical plc. He is currently Audit Committee Chairman and a member of the
Remuneration Committee at AIM listed EnSilica plc. David was formerly a non-executive director at
Sepura plc which was listed on the main market. David is also Treasurer and Trustee at British Exploring
Society, a youth development charity.
As Chairman I am responsible for the leadership of the Board and for ensuring the Board’s effectiveness. I also have the
responsibility for conducting Board meetings and making sure that there is effective and timely communication to our
shareholders. In my role as Chair, I also provide advice, counsel and support to the executive.
The 2018 QCA Corporate Governance Code
The AIM Rule 26 introduced during our 2019 year requires the Group to follow a recognised corporate code of
governance. The Board, after due consideration, agreed to follow the 2018 QCA Corporate Governance Code after
concluding that it was the one best suited to SDI’s business, aims and ambitions. The Board believes that the Group
complies with the Code, but is committed to continuously improving its governance over time.
Here we explain how we implement the 10 principles of the QCA Corporate Governance Code in practice.
7
Principle
Commentary
The Board has a shared view of SDI’s purpose, business model and
strategy. Our vision is to develop our existing technologies and to grow
through strategic acquisitions. We believe that acquiring companies
which complement the capabilities within SDI will promote organic
growth and give us the opportunity to explore challenges and new
markets within the fast-evolving science and technology sectors.
Further Information
The Strategy section of
this Annual Report and
our website
1
A strategy and business
model which promotes
long-term value for
shareholders
2
understanding and
meeting shareholder
needs and expectations
3
Taking account of
wider stakeholder and
social responsibilities
and their implications
for long-term success
Responsibility for shareholder liaison rests principally with our CEO
supported by our CFO. However, all our Board members attach a
high degree of importance to providing shareholders with clear and
transparent information on the Group’s activities, strategy and
financial position.
Details of all
shareholder
communications
are provided on
our website
The Board holds meetings with institutional investors and other large
shareholders following the release of the interim and financial results,
and in recent years has also presented to smaller shareholders and the
general public using the same material with opportunity to ask questions
and provide feedback to the Board.
We regard our Annual General Meeting as a good opportunity to
engage directly with shareholders through a question-and-answer
session. We provide the market and shareholders with the results of
AGM and GM voting via RNS and other communication channels
including the Group’s website.
SDI’s vision involves encouraging our subsidiary businesses to work
together to help advance medical and scientific knowledge, increase the
technical capabilities of industry and ultimately improve the standard of
living of the population as a whole.
As well as that overarching purpose, the Board recognises that long-
term business success relies on good relations with a range of different
stakeholder groups both internal and external such as staff, suppliers
and customers.
We also seek to understand the impact our business activities have on
the communities in which we operate and consider our corporate
social responsibilities and how these issues are integrated into our
long-term strategy.
We encourage feedback from all our stakeholders and where appropriate
use that feedback to shape our future direction e.g., new methods or
product offerings.
The “Section 172” report
presented on pages
22-23 in this Annual
Report provides further
information
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Corporate Governance Statement (continued)
Governance Report 28/29
Principle
4
Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation
5
Maintaining the Board
as a well-functioning,
balanced team led by
the Chair
Commentary
We have addressed the principal risks we face by the appointment of an
experienced executive team supported by experienced non-executive
directors and a team of appropriately qualified professional advisers.
Our executive directors are closely involved in the day-to-day operations of
the Group and of our operating subsidiaries and report to the Board in detail
at regular intervals. Relevant papers are distributed to members of the Board
in advance of Board and Committee meetings. Detailed financial reports of
the Group’s financial performance are also provided on a regular basis.
Our directors’ knowledge and understanding of the Group is further
enhanced by on-site visits to operational units; directors also receive
presentations from senior management on the performance and strategies
of their business units.
We have included in our strategy meetings with our operating subsidiaries
a specific agenda item on risk management, to understand individual
business risks and to confirm appropriate mitigating actions.
Directors also have the contractual right to take independent professional
advice on any matter – at SDI’s expense – if they deem it necessary in
order to carry out their responsibilities.
Our Board consists of two executive directors (CEO and CFO) together with
the Chairman and two independent non-executive directors. We believe
this to be a good balance for a business of our size. Due to their working
backgrounds and professional experience the non-executive directors
provide a solid foundation for good corporate governance for the Group.
They are also independent of management and ensure that no individual or
group dominates the Board’s decision-making process.
To ensure the Board functions well, our non-executive directors are
requested to attend eleven Board and Board Committee meetings per year.
They are also required to be available at other times between meetings
when necessary for face-to-face and phone/web meetings. We also hold
an annual strategy meeting at which directors’ attendance is mandatory.
Each non-executive director must demonstrate that they have sufficient
time to devote to our business.
To support the Board, we have put in place Audit, Remuneration and
Nomination Committees all of which have agreed formal terms of reference.
Further Information
The Principal Risks and
Uncertainties section
of this Annual Report
sets out some of the
principal risks and
uncertainties faced by
the Group
Biographies of the
Directors are presented
on page 26 in this
Annual Report and on
our website.
Reports of the Board
committees are also
presented on pages
32-33 in this Report.
6
Ensuring the directors
have the necessary
up-to-date experience
skills and capabilities
Our directors have been chosen because of the skills and experience they
offer. Of our five directors one is female and four are male. All have listed
company experience and one was the CEO of an investment bank, three
are accountants, one a lawyer.
Our directors attend industry and regulatory learning and networking
events in order to keep up to date with relevant developments.
Biographies of the
Directors are presented
on page 26 in this
Annual Report and on
our website.
7
Evaluate Board
performance
based on clear and
relevant objectives,
seeking continuous
improvement
We undertake annual monitoring of personal and corporate performance.
The responsibility for assessing and monitoring the performance of the
executive directors lies with the independent non-executive directors.
Agreed personal objectives and targets are set each year for the executive
directors and performance measured against these metrics.
Again this year we performed a formal Board evaluation process. The
process was led by our Chairman assisted by the Chair of the Nominations
Committee and required directors to answer a set of questions setting out
their views on the effectiveness of the Board and on the value of their Board
contributions. The results of that assessment process were used by the
Chairman to facilitate discussions with each individual director and with the
Board as a whole. The questions were based around issues arising from the
ten principles of the QCA Code and the results have assisted in continuing
our focus on strategy and risk management.
Commentary
Further Information
We believe it is the responsibility of the Board and senior leaders to
ensure that the culture of our organisation is based on ethical values and
behaviours. As well as leading by example, our ethics-based culture is
promoted through our business behaviours, decisions, processes and
operations, as well as the management of the risk of ethical misconduct.
In addition, we have mechanisms to support high ethical standards –
e.g., for raising concerns and reporting misconduct. We also aim to
include ethical criteria in recruitment and in performance appraisals and
have detailed policies relating to important issues such as discrimination,
harassment, bribery and corruption, and conflicts of interest. We expect
all our staff to adhere to these high standards.
We are keen to invest in our people not just our companies. With that
in mind we seek to make our workplaces a better environment and to
encourage all our staff to undergo relevant training and development.
Our non-executive directors scrutinise the performance of
management against the Group’s objectives and also monitor the
reporting of performance.
The Board has considered mechanisms by which the business and the
financial risks facing the Group are managed and reported to the Board.
The principal business and financial risks have been identified and control
procedures implemented. The Board acknowledges its responsibility for
reviewing the effectiveness of the systems that are in place to manage risk.
To achieve this aim the Board has a formal schedule of matters specifically
reserved to it for decisions including the approval of annual and interim
results and recommendation of dividends, approval of annual budgets,
approval of larger capital expenditure and investment proposals, review of
the overall system of internal control and risk management and review of
corporate governance arrangements.
Other responsibilities are delegated to the Board Committees, being the
Audit, Remuneration and Nomination committees, which as explained
in section 5 above operate within clearly defined terms of reference, and
which report back to the Board.
We have set out in section 2 above how we maintain a regular dialogue
with our shareholders including welcoming all shareholders to our AGMs.
Reports of the Board
committees are also
presented on pages
32-33 in this Report.
Further information and
the resolutions put to a
vote at annual general
meetings can be found
on our website.
Principle
8
Promote a corporate
culture that is based
on ethical values and
behaviours
9
Maintain governance
structures and
processes that are
fit for purpose and
support good decision
making by the Board
10
Communicate how the
company is governed
and is performing by
maintaining a dialogue
with shareholders and
other relevant
stakeholders
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Corporate Governance Statement (continued)
Governance Report 30/31
The Board
The Board comprises the Chairman, two Executive Directors and two Non-Executive Directors. The Non-Executive
Directors are considered to be independent, provide a solid foundation for good corporate governance for the Group,
and ensure that no individual or group dominates the Board’s decision-making process. The Non-Executive Directors are
independent of management. Each Non-Executive Director must continue to demonstrate that they have sufficient time to
devote to the Company’s business and attendance at Board and Committee meetings is summarised later in this report.
The Non-Executive Directors constructively challenge and assist in developing the strategy of the Group using their
experience and knowledge of acquisition targets and fundraising. They scrutinise the performance of management against
the Group’s objectives and also monitor the reporting of performance. The Board is provided with regular and timely
information on the financial performance of the Group as a whole, together with reports on trading matters, markets and
other relevant matters.
There are clearly defined roles for the Chairman and CEO. The Chairman is responsible for leadership of the Board,
ensuring effectiveness of the Board in all aspects, conducting Board meetings and the effective and timely communication
of information to shareholders. The Chairman is able to provide advice, counsel and support to the Chief Executive. The
Chief Executive has direct charge of the Group’s day-to-day activities and sets the operating plans and budgets required to
deliver the agreed strategy. The Chief Executive is also responsible for ensuring that the Group has in place appropriate risk
management and control mechanisms.
The Board is collectively responsible for the performance of the Group and is responsible to shareholders for proper
management of the Group. A statement of Directors’ responsibilities is given on page 36 and a statement on going
concern is given on pages 37-38.
The Board has a formal schedule of matters specifically reserved to it for decisions including the approval of annual and
interim results and recommendation of dividends, approval of annual budgets, approval of larger capital expenditure
and investment proposals, review of the overall system of internal control and risk management and review of corporate
governance arrangements. Other responsibilities are delegated to the Board Committees, being the Audit, Remuneration
and Nomination committees, which operate within clearly defined terms of reference, and which report back to the Board.
Relevant papers are distributed to members in advance of Board and Committee meetings. Directors’ knowledge and
understanding of the Group is enhanced by visits to the operations and by receiving presentations by senior management
on the results and strategies of the business units. Directors may take independent professional advice on any matter at
the Company’s expense if they deem it necessary in order to carry out their responsibilities. The Company has secured
appropriate insurance cover for Directors and Officers.
Board Committees
The following committees deal with specific aspects of the Group’s affairs.
Audit Committee
The Audit Committee, which is chaired by D. Tilston and has I. Napper as the other member, meets not less than twice
annually and more frequently if required.
The Board considers that both members of the Audit Committee have recent and relevant financial experience and
an understanding of accounting and financial issues relevant to the industries in which SDI Group operates. The
Committee provides a forum for reporting by the Group’s external auditors. Where appropriate meetings are also
attended by the Chairman and executives at the invitation of the Committee.
nomination Committee
This Committee is chaired by Isabel Napper and has David Tilston as its other member and meets at least once per
annum. Where appropriate meetings are also attended by the Chairman, the CEO and the CFO at the invitation of
the Committee.
The Nomination Committee focuses on evaluating the Board of Directors, examining the skills and characteristics
which are needed in Board candidates, and on succession issues. Its principal focus during the last financial year was
in continuing to assist the Chairman with the Board evaluation process as set out in Principle 7 of our Governance
Statement (page 28) and in leading the process of recruitment for the CFO following Jon Abell’s announcement of his
intended retirement.
Attendance at Board and Committee Meetings
The members’ attendance at Board and Committee meetings during the year is disclosed in the table below. Ken Ford
retired from the Remuneration Committee at the start of the year.
K Ford
M Creedon
I Napper
D Tilston
J Abell
Board
11/11
11/11
10/11
11/11
11/11
Audit
Remuneration
nomination
–
–
4/4
4/4
–
1/6
–
6/6
6/6
–
–
–
1/1
1/1
–
Conformance with Best Practice
The Board has reviewed its composition against certain non-statutory “best practice” guidelines and makes the
following observations:
That remuneration of non-executive directors should be with basic fees only (excluding historical, one-off options
grants if the quantum is not considered material)
– The Group awarded one-time share option awards on appointment in 2017 and 2018 to its current non-executive
directors, and these were considered at the time to be not material, although they became more valuable over time.
These have since been exercised, and the Board does not expect to make further awards to non-executive directors.
The Board therefore considers its non-executive directors to be independent of management and expects them to
exercise their independence to the fullest extent.
That the remuneration committee should not include non-independent or executive members
– Ken Ford has retired from the remuneration committee, and therefore all members are independent.
That the Company Secretary should not be an executive director
– The Board members have significant external Board of Directors’ experience and are aware that they may seek
independent professional advice at the company’s expense to discharge their duties. The Board believes that the
company is currently best served by combining the roles of CFO and Company Secretary, in the interests of efficiency
and cost. This will be reviewed on appointment of a new CFO in replacement of Jon Abell who is retiring.
A report of the Audit Committee is provided on page 32.
The Board expects to keep any such matters under at least annual review.
Remuneration Committee
A report of the Remuneration Committee and the Directors’ remuneration report can be found on pages 33-35.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Report of the Audit Committee
Report of the Remuneration Committee
32/33
I am pleased to present the Audit
Committee report for the year
ended 30 April 2022.
Composition of the
Committee
The Committee consists of myself
(as Chairman) and Isabel Napper.
The Chairman, Executive Directors
and Group Financial Controller may
be invited to attend Committee
meetings if required. During the
year, the Committee met four times,
to approve the audit plan, review
the audit conclusions and interim
findings and to consider other
matters delegated to the Committee.
The Board is satisfied that I, as
Chairman of the Committee,
have recent and relevant financial
experience. I am a Chartered
Accountant; I have served as
Group Finance Director in several
quoted companies and have prior
experience as an Audit Committee
Chairman. I report the Committee’s
activities at Board meetings and
the minutes of each meeting are
made available to all members
of the Board. The Committee
has satisfactorily completed a
self-assessment exercise on its
effectiveness using externally
sourced material.
l manage the relationship with
the Group’s external Auditor
and review their suitability and
independence;
l negotiate and approve the external
Auditor’s fee, the scope of their
audit and terms of engagement;
l advise on the appointment of
external Auditors and to review and
monitor the extent of the non-
audit services undertaken by the
Group’s external Auditor;
l review of the risk management and
internal control systems;
l review the assessment of going
concern; and
l assess the need for an internal
audit function.
Role of the External Auditor
The Committee monitors the
relationship with its external Auditor,
Grant Thornton UK LLP, to ensure
that auditor independence and
objectivity are maintained. As part
of its review the Committee has
established a policy in respect of
the provision of non-audit services
by the external Auditor which it
monitors. No issues impacting
upon the Auditor’s independence
were observed or brought to the
Committee’s attention.
Responsibilities
Audit Process
The Committee’s main duties are to:
l ensure the integrity of the financial
statements (including annual
and interim accounts and results
announcements);
l review significant financial
reporting judgements and the
application of accounting policies
thereon;
l ensure the Annual Report and
Accounts are fair, balanced and
understandable and recommend
their approval to the Board;
The external Auditor prepares an
audit plan for its review of the full
year financial statements. The audit
plan sets out the scope of the audit,
specific areas of risk to target and the
audit timetable. This plan is reviewed
and agreed in advance by the
Committee. Following completion of
audit fieldwork the Auditor presented
their findings to the Committee for
discussion, including accounting
judgements undertaken in respect of
various matters including acquisition
accounting and research and
development capitalisation.
Internal Audit
At present the Group does not have
a formal internal audit function and
the Committee will keep this matter
under review as the Group’s
activities expand.
Risk Management and
Internal Controls
The Corporate Governance
Statement on pages 27-31 explains
the measures taken to embed
effective risk management
throughout the Group which is
dependent upon the close
involvement of the executive directors
in the day-to-day operations of the
Group, the strength of subsidiary
management teams and reporting
from the operating subsidiaries. The
Group Financial Controller reports
to the Committee on any internal
controls’ weaknesses identified
during his visits to subsidiaries.
The Committee is responsible for
reviewing the risk management
and internal control framework and
ensuring that it operates effectively.
The Committee has reviewed the
framework by (a) receiving papers
and discussing oversight practices
with the Group CEO, Group CFO and
Group Financial Controller and (b)
receiving a report from the external
auditors on observations made during
their audits of operating subsidiaries
and determined that it remains
appropriate for the Group’s current
scale of operations.
David Tilston
Chairman
Audit Committee
21 July 2022
On behalf of the Board, I am
pleased to present the report of the
Remuneration Committee for the
year ended 30 April 2022.
is simple and straightforward so
that there is a clear link between
Group performance and executive
remuneration.
The Committee is chaired by myself
and has David Tilston as its other
member. Other regular attendees,
at the invitation of the Committee,
include the Chairman, the CEO and
the CFO.
We meet as a Committee at least
two times every year and our role
is to determine the Group’s policy
for executive remuneration and the
individual remuneration packages
for executive directors together
with other designated senior
management. A particular function
of the Committee is the approval
of all awards of share options to
directors and staff. The Committee’s
terms of reference are available on
the Group’s website.
In setting the Group’s remuneration
policy, the Committee considers
a number of factors including the
following:
l Salaries and benefits available
to executive directors of
comparable companies;
l The need to both attract and
retain executives of appropriate
calibre; and
l The continued commitment
of executives to the Group’s
profitable growth and sustainable
development through
appropriate incentive schemes
(including the award of shares
and share options).
Remuneration of Executive
Directors
Consistent with this policy, the
benefit packages awarded to our
executive directors comprise a mix
of basic salary and performance-
related remuneration aimed at
incentivising executive behaviour
to achieve the Group’s goals. We
are keen to ensure that the package
The remuneration packages cover
the following elements:
l Base salary: the Remuneration
Committee sets base salaries
to reflect the responsibilities
and the skills, knowledge and
experience of the individual and
the complexity of the role;
l Bonus Scheme: the executive
directors are eligible to
receive a bonus dependent
on both individual and Group
performance as determined by
the Remuneration Committee.
This has been capped at 50% of
the individual’s salary;
l Long-Term Incentive Plan shares:
the executive directors are
eligible to receive share options,
related to Group performance
under the terms of a long-term
incentive scheme determined by
the Remuneration Committee;
l Equity: share options awarded as
appropriate; and
l Group contribution into a
personal pension scheme, life
assurance, and private medical
insurance.
The CEO and CFO are engaged
under separate contracts which
require a notice period of six
months given at any time by the
Group or the individual.
During the 2021-22 year, the
Committee engaged remuneration
consultants to benchmark the
compensation of the executive
directors, following several years
of significant growth of the Group
under current management and
a period under the COVID-19
pandemic during which the Group’s
performance had been strong
but compensation increases had
been limited. It was decided to
award salary increases in a phased
approach, with an interim increase
awarded in January 2022 and
further adjustments expected in
2022-23. The need to review in
2022-23 the levels of all elements
of the remuneration packages
for the CEO and CFO has also
been informed by the recruitment
process for a replacement for
Jon Abell as CFO.
The details of the those awards
already made under the LTIP
scheme are set out in the
Remuneration Report on
pages 34-35.
Remuneration of Chairman
and non-Executive Directors
The fees paid to the non-executive
directors are determined by the
Board. The non-executive directors
each received a single award of
share options on appointment
in 2017 and 2018, but these
have since been exercised. The
Chairman has participated until
now in the Group’s LTIP scheme.
The Chairman and non-executive
directors do not receive any other
forms of benefits such as medical
insurance or pension.
The Chairman and the non-
executive directors are engaged
under service contracts each of
which provide that notice of three
months can be given at any time by
the Group or the individual.
Isabel napper
Chairman
Remuneration Committee
21 July 2022
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Directors’ Remuneration Report
Governance Report 34/35
Statement about Basis of Preparation
While not a statutory requirement, SDI has produced this report, to be read in conjunction with the Report of the
Remuneration Committee, to comply with AIM rule 19 and also meet the requirements of the QCA code.
Directors’ remuneration and pension entitlements
The remuneration of the Directors is set out below:
K Ford
M Creedon
I Napper
D Tilston
J Abell
Salary
/ Fees
£’000
58
187
34
34
134
447
Taxable
Benefits
£’000
Share-based
payment
charge
£’000
Pension
£’000
–
2
–
–
2
4
40
85
–
–
66
191
–
9
–
–
7
16
Bonus
£’000
–
55
–
–
32
87
2022
Total
£’000
98
338
34
34
241
745
2021
Total
£’000
83
291
30
35
229
668
Directors’ beneficial interests
During the year, 5 directors exercised options over the Ordinary shares of the Company realising a gain on exercise of
£4,343k (2021: £nil). The share-based payment expense totalled £191k (2021: £202k).
Directors’ beneficial interests in shares in the Company are set out below:
K Ford
M Creedon
I Napper
D Tilston
J Abell
2022
number
2021
number
1,015,217
1,250,000
774,625
442,452
65,000
100,000
65,000
90,000
371,739
100,000
None of the Directors had or has an interest in any material contract relating to the business of the Company or any of
its subsidiary undertakings.
Directors’ beneficial interests in share options in the Company are set out below:
K Ford
M Creedon
I Napper
D Tilston
J Abell
2022
number
2021
number
175,835
850,672
712,974
1,952,327
–
–
250,000
250,000
645,864
1,134,103
Service contracts
The service contracts with M Creedon dated 25 April 2010 and with J Abell dated 4 April 2018 include a notice period of
six months if given by either party.
The non-executive Directors’ service contracts and the service contract of the Chairman include a notice period of
three months if given by either party.
Long-Term Incentive Plan (“LTIP”)
This LTIP was introduced in December 2018 to provide an effective mechanism for senior executives to participate in
the company’s equity, aligning their interests with those of the shareholders. The LTIP scheme overall has a duration of
ten years and provides for a maximum of 10% of the company’s equity to be granted (under all schemes) to executives
in that period, subject to performance conditions which are set for each award. Awards under the scheme in previous
years have been made in December 2018 and in March 2020.
An award was made on 01 October 2021 with performance conditions based for 50% on the growth in fully-diluted
Earnings Per Share in the three years starting 1 May 2021 and for 50% on the total shareholder return over three years
for SDI shareholders compared with a basket of twenty comparable companies. Subject to the rules of the LTIP, vesting
is on the third anniversary of the date of grant, to the extent that the performance conditions are met, with a minimum
holding period of four years including the vesting period.
The directors participating in the scheme at the date of this report and their maximum respective entitlements under the
scheme to shares in SDI Group plc are as follows:
K Ford
M Creedon
J Abell
01 October
2021 award
40,380
62,820
33,500
Total
Awards
175,835
273,502
145,864
On 21 December 2021, 100% of the options awarded under the scheme in December 2018 vested.
The above table is a subset of the share option table on the previous page.
The market price of the company’s shares at the end of the financial year was 149p and ranged from 136.5 to 217p
during the year. The exercise price of the ordinary options ranges from £0.172 to £1.740, and of LTIP options is £0.010.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Directors’ Report
Governance Report 36/37
Directors’ Responsibilities Statement
The directors are responsible for preparing the Annual Report comprising Strategic Report, Governance Report and
the Financial Statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
Directors have to prepare consolidated financial statements in accordance with applicable law and international
accounting standards in conformity with the requirements of the UK-adopted international accounting standards
and have elected to prepare separate parent company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws, including
FRS101 Reduced Disclosure Framework). Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and
the profit or loss of the Company and the Group for that period. In preparing these financial statements, the directors
are required to:
l select suitable accounting policies and then apply them consistently
l make judgements and accounting estimates that are reasonable and prudent
l state whether applicable international accounting standards in conformity with the requirements of the UK-
adopted international accounting standards have been followed, subject to any material departures disclosed and
explained in the Group and parent company financial statements respectively
l prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Company or the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The directors confirm that:
Directors
The directors who served during the year are set out below.
K Ford | M Creedon | I Napper | D Tilston | J Abell
The interests of the directors and their families in the share capital of the Company are shown in the directors’
remuneration report on page 34-35.
The appointment and replacement of directors of the Company is governed by its Articles of Association and the
Companies Act 2006. The Articles of Association may be amended by special resolution of the shareholders.
The Company must have a minimum of two directors holding office at all times. There is no maximum number of directors.
The Company may by ordinary resolution, appoint any person to be a director. The Board may appoint a person who is
willing to act as director, either to fill a vacancy or as an addition to the Board. A director appointed in this way may hold
office only until the dissolution of the next Annual General Meeting unless he or she is reappointed during the meeting.
Directors’ Indemnities
The directors have the benefit of an indemnity from the Company in respect of liabilities incurred as a result of their
office. This indemnity is provided under the Company’s Articles of Association and satisfies the indemnity provisions of
the Companies Act 2006. The Company has taken out an insurance policy in respect of those liabilities for which the
directors may not be indemnified. Neither the indemnity nor the insurance provides cover in the event that a director is
proved to have acted dishonestly or fraudulently.
Power Of Directors
The directors are responsible for the management of the business of the Company and may exercise all powers of the
Company subject to applicable legislation and regulation and the Memorandum and Articles of Association.
At the Annual General Meeting held on 21 September 2021, the directors were given the power to:
l Allot ordinary shares up to an aggregate nominal value of £330,000;
l Issue equity securities for cash, otherwise than to existing shareholders in proportion to their existing
l so far as each director is aware there is no relevant audit information of which the Group’s auditor is unaware; and
shareholdings, up to an aggregate nominal value of £49,500.
l the directors have taken all steps that they ought to have taken as directors in order to make themselves aware of
any relevant audit information and to establish that the Group’s auditor is aware of that information.
The directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Group’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Group Results
The Group’s profit for the year after taxation amounted to £7.5m (2021: £4.7m) and has been transferred to reserves.
All KPIs and risks are disclosed in the Strategic Report on pages 20 and 25.
The Board does not recommend the payment of a dividend.
Similar powers will form part of the resolutions to be put to the forthcoming AGM expected to be held on
21 September 2022.
Going Concern
The consolidated financial statements have been prepared on a going concern basis. The Group’s business activities,
together with the factors likely to affect its future development, performance and position are set out within this
Strategic report. The financial position of the Group, its cash flows, and liquidity position are provided in the financial
statements on pages 54-57.
The Group ended 2022 with net cash of £1.1m compared to £0.7m at 30 April 2021 and generated cash from operations
of £14.7m. This cash generation arose from the strong performance of the Group’s principal operating companies,
enabled by 21.6% organic growth, and was mostly deployed in acquiring profitable businesses. In addition, the Group
also increased its borrowing facilities on 01 November 2021 to £20m and extended the repayment date to November
2024, providing the Group with greater certainty over long-term liquidity. An amount totalling £4m is currently drawn
down under this facility (see note 20).
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Directors’ Report (continued)
Governance Report 38/39
Going Concern (continued)
Substantial Shareholdings
The Board have considered the ongoing impacts of the Covid-19 pandemic and the war in Ukraine, including their
effects on the wider economy. The Group is in a strong financial position with high cash balances and available
facilities, sufficient headroom on all covenants associated with the debt, good profitability and a strong future
order book, enabling it to face any reasonable likely challenge of the continued uncertain global economic
environment. The Board has reviewed forecasts for the period to 31 October 2024, including severe downside
scenarios which the Board considers extremely unlikely and would not cause any significant challenges to the
Group’s continued existence.
The Board therefore have a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and therefore continue to adopt the going concern basis in
preparing the Annual Report and Accounts.
Post Balance Sheet Events
There are no events to note.
Research and Development
Each of the Group’s businesses devotes appropriate resources to maintaining and expanding its competitive position
by researching and developing new products and processes as well as updating existing products. 51 employees
were employed for development activities in the year (2021: 42).
Future Development
The directors expect that the Group will continue to execute its strategy of acquiring and managing niche
technology businesses.
Structure of Share Capital
As at 30 April 2022 the Company’s authorised share capital was £10,000,000 comprising 1,000,000,000 ordinary
shares of 1p each. As at 30 April 2022 the Company had 102,199,676 (2021: 98,408,164) ordinary shares in issue
with a nominal value of 1p each.
Corporate Governance
Corporate Governance is discussed on pages 27-31.
Financial Risk Management Objectives and Policies
Financial risk management objectives and policies are discussed in note 26.
Employee Engagement with other Stakeholders
The company engages with its employees and other stakeholders as disclosed in the Section 172(1) statement on
pages 22-23.
Health and Safety Policies
The Group is committed to conducting its business in a manner which ensures high standards of health and safety
for its employees, visitors and general public. It complies with all applicable and regulatory requirements.
Streamlined Energy and Carbon Reporting (“SECR”)
The Group does not report under SECR as none of its subsidiary undertakings are large companies. The parent
company is exempt from reporting as it is a low energy user consuming less than 40MWh per annum.
As of 21 July 2022 the Company is aware of the following shareholders who hold an interest of 3% or more in the
Company’s ordinary share capital.
Berenberg Wealth and Asset Management
Herald Investment Management
Danske Bank A/S
Business Growth Fund
JPMorgan Asset Management
Tellworth Capital
Octopus Investments
Hargreaves Lansdown
Killik stockbrokers
Charles Stanley
number
of ordinary
shares
Percentage
of share
capital
9,651,726
8,178,149
6,980,310
6,336,526
5,010,000
4,740,329
3,719,640
3,629,335
3,463,534
3,123,307
9.44%
8.00%
6.83%
6.20%
4.90%
4.64%
3.64%
3.55%
3.39%
3.06%
Auditor
A resolution to re-appoint Grant Thornton UK LLP as auditors for the ensuing year will be proposed at the Annual
General Meeting in accordance with section 489 of the Companies Act 2006.
On behalf of the Board
Ken Ford
Chairman
21 July 2022
Mike Creedon
Chief Executive Officer
21 July 2022
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Report of the Independent Auditor
to the members of the SDI Group plc
Financial Statements 40/41
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of SDI Group plc (the ‘parent company’) and its subsidiaries (the
‘Group’) for the year ended 30 April 2022, which comprise the Consolidated Income Statement & Statement
of Comprehensive Income, the Consolidated Balance Sheet, the Consolidated Statement of Cash Flows,
the Consolidated Statement of Changes in Equity, the notes to the Consolidated Financial Statements
including a summary of significant accounting policies, the Company Balance Sheet, the Company Statement
of Changes in Equity, and the notes to the Company Financial Statements including a summary of significant
accounting policies. The financial reporting framework that has been applied in the preparation of the Group
financial statements is applicable law and UK-adopted international accounting standards. The financial reporting
framework that has been applied in the preparation of the parent company financial statements is applicable
law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’ (United Kingdom Generally Accepted Accounting Practice).
In our opinion:
l the financial statements give a true and fair view of the state of the Group’s and of the parent company’s
affairs as at 30 April 2022 and of the Group’s profit for the year then ended;
l the Group financial statements have been properly prepared in accordance with UK-adopted international
accounting standards;
l the parent company financial statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
l the financial statements have been prepared in accordance with the requirements of the Companies
Act 2006.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the
financial statements’ section of our report. We are independent of the Group and the parent company in accordance
with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our opinion.
Conclusions Relating to Going Concern
We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s and the parent company’s ability to continue as a going concern. If we conclude
that a material uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit
evidence obtained up to the date of our report. However, future events or conditions may cause the Group or the parent
company to cease to continue as a going concern.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Report of the Independent Auditor (continued)
Financial Statements 42/43
● Key Audit Matter ● Significant Risk ● Other Risk
High
Potential
Financial
Statement
Impact
Low
Low
Improper
Revenue
Recognition
Management
Override of
Controls
Valuation of Intangible
Assets on Recognition
of the Acquired
Businesses
Impairment of Intangible
Assets in Relation to the
Monmouth CGU
Inventory
Trade Receivables
Capitalisation Development Costs
Going Concern
Extent of Management Judgement
High
Our evaluation of the directors’ assessment of the
Group’s and the parent company’s ability to continue to
adopt the going concern basis of accounting included:
l obtaining management’s base case forecasts
covering the period to 31 October 2024, assessing
how these forecasts were compiled and assessing
their appropriateness by applying sensitivities to the
underlying assumptions, which we also challenged;
l assessing the accuracy of management’s forecasting
by comparing the reliability of past forecasts to past
actual results;
l obtaining management’s downside scenarios prepared
to assess possible risks to going concern, and
management’s mitigating actions; and
l assessing the adequacy of related disclosures within
High
the Annual Report 2022.
In our evaluation of the directors’ conclusions, we
Potential
Financial
considered the inherent risks associated with the Group’s
Statement
Impact
and the parent company’s business model including effects
arising from macro-economic uncertainties such as the
Ukraine crisis and Covid-19, we assessed and challenged the
reasonableness of estimates made by the directors and the
related disclosures and analysed how those risks might affect
the Group’s and the parent company’s financial resources or
ability to continue operations over the going concern period.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the Group’s and the parent company’s
ability to continue as a going concern for a period of at
least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting
in the preparation of the financial statements is appropriate.
Acquired
Intangibles
Revenue
Impairment
of Intangibles
The responsibilities of the directors with respect to going
concern are described in the ‘Responsibilities of directors for
the financial statements’ section of this report.
Management
Override of
Controls
Capitalisation
Development
Going Concern
Inventory
Materiality
lity
a
i
r
e
t
a
M
Key Au
dit
M
a
t
t
e
r
s
g
n
Sco p i
Receivables
Overview of Our Audit Approach
Low
Low
Extent of Management Judgement
High
Overall materiality:
Group: £503,000, which represents 5% of the Group’s profit before tax at
the planning stage of the audit.
● Key Audit Matter ● Significant Risk ● Other Risk
Parent company: £377,000, which represents 2% of the parent company’s
total assets at the planning stage of the audit, capped due to the aggregate
of the Group’s significant component materialities exceeding the firm’s
permitted multiple.
Key audit matters were identified as:
Description
Audit
Response
l Improper revenue recognition (same as previous year);
KAM
l Valuation of intangible assets on recognition of the acquired
businesses (same as previous year); and
l Impairment of intangible assets in relation to the Monmouth CGU
Disclosures
(new this year).
Our Results/
Key Observations
Our auditor’s report for the year ended 30 April 2021 included one key
audit matter that has not been reported a key audit matter in our current
year’s report. This relates to going concern, which has no longer been
assessed as a significant risk.
We performed an audit of the financial information using component materiality (full-scope audit) for the parent
company, SDI Group plc, and four other significant components of the Group. This gave coverage of 74% of the
Group’s total assets, 54% of the Group’s revenue and 73% of the Group’s profit before tax.
Materiality
We performed an audit of one or more account balances, classes of transactions or disclosures of the component
(specific-scope audit) for the eight non-significant UK Group components. This gave additional coverage of 23% of
the Group’s total assets, 40% of the Group’s revenue and 25% of the Group’s profit before tax.
Analytical procedures were performed for all other components of the Group that were neither significant nor material.
There were no changes to the audit approach from the prior year.
SDI Group plc Annual Report 2022
lity
a
i
r
e
t
a
M
Key Au
dit
M
a
t
t
e
r
s
g
n
Sco p i
Materiality
Key Audit Matters
a
t
M
Key Au
lity
dit
a
i
r
e
t
a
M
Key audit matters are those matters that, in our
professional judgement, were of most significance
in our audit of the financial statements of the current
period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that
we identified. These matters included those that had the
greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the
engagement team. These matters were addressed in
the context of our audit of the financial statements as a
Sco p i
whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
r
s
e
n
g
t
Description
Audit
Response
KAM
Disclosures
Our Results/
Key Observations
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to the audit.
High
Potential
Financial
Statement
Impact
Low
Low
Improper
Revenue
Recognition
Management
Override of
Controls
Valuation of Intangible
Assets on Recognition
of the Acquired
Businesses
Impairment of Intangible
Assets in Relation to the
Monmouth CGU
Inventory
Trade Receivables
Capitalisation Development Costs
Going Concern
Extent of Management Judgement
High
● Key Audit Matter ● Significant Risk ● Other Risk
Description
Audit
Response
SDI Group plc Annual Report 2022
KAM
Disclosures
Our Results/
Key Observations
Report of the Independent Auditor (continued)
Financial Statements 44/45
Key Audit Matter – Group
How our scope addressed the matter – Group
Key Audit Matter – Group
How our scope addressed the matter – Group
Improper Revenue Recognition
We identified improper revenue recognition as one
of the most significant assessed risks of material
misstatement due to fraud.
There is an underlying incentive for performance to
be inflated through inaccurate revenue recognition.
This risk is therefore judged to be due to fraud.
The Group has recognised revenue of £50m (2021:
£35m) in its consolidated income statement during
the year, which is comprised of revenue from sales
of goods and income from service contracts.
As the Group’s revenue comprises various
individually material streams which are either
recognised at a point in time or over time in
accordance with IFRS 15 ‘Revenue from Contracts
with Customers’, the risk that revenue may be
improperly recognised has been identified as a
significant risk. This significant risk was pinpointed to
transactions that did not follow the normal business
process for certain subsidiaries, or for a single
contract which was highly material in relation to one
subsidiary, or for service contracts the significant risk
was pinpointed to the last quarter of the year where
the risk of incomplete deferred income was greatest.
In responding to the key audit matter, we performed
the following audit procedures:
l obtained an understanding of the process followed
for the recognition of revenue and tested the design
and implementation of relevant controls. From the
work performed, we noted two significant control
deficiencies in relation to service revenue at the
component Monmouth Scientific Limited, and as a
result, we extended our detailed testing in this area
to address the increased level of risk;
l assessed whether the revenue recognition
accounting policy for each type of revenue
was consistent with IFRS 15 and testing that
these policies were followed through our
substantive tests;
l performed data analytics procedures designed
to highlight any unusual transactions or postings
recorded in revenue, which were then all subject
to detailed testing;
l tested a sample of revenue transactions in respect
of sale of goods and agreeing them to a cash
receipt or proof of delivery to check that the sale
did occur;
l tested a sample of revenue transactions in respect
of contract income for services by obtaining
supporting documentation to prove occurrence,
recalculating the revenue recognised, and assessing
the appropriateness of any deferred or accrued
income at year end; and
l agreed a sample of transactions before and after the
year end to supporting documentation to determine
whether transactions had been recorded in the
correct period.
Valuation of Intangible Assets on
Recognition of Acquired Businesses
We identified the valuation of intangible assets
on recognition of acquired businesses as one
of the most significant assessed risks of material
misstatement due to error.
There is a risk that the intangible assets, including
goodwill, are not recognised in accordance with
IFRS 3 ‘Business Combinations’.
Specifically, there is significant judgement and
complexity associated with the allocation of excess
consideration over net assets acquired between
separable intangible assets and remaining goodwill.
Due to the inherent uncertainty and key
assumptions involved in management’s calculation
of the valuation of acquired intangible assets, we
determined the risk to be a significant risk.
In responding to the key audit matter, we
performed the following audit procedures:
l assessed the Group’s accounting for
acquisitions to check whether it was in
accordance with the Group’s financial reporting
framework, including IFRS 3;
l assessed the consideration for the acquisitions,
including work around any deferred or
contingent consideration;
l used our auditor’s expert to assess the
appropriateness of the valuation methodology
used by management, including the methodology
adopted for identifying separate intangible
assets distinct from goodwill and assessing the
appropriateness of discount rates and growth
rates applied;
l evaluated the acquisition workings prepared by
management and checking its mathematical
accuracy; and
l challenged the assumptions used in the valuation
models, to assess whether they are reasonable
and consistent with our knowledge of the
acquired businesses.
Relevant Disclosures in the Annual
Report 2022
l Financial Statements:
Note 3, Principal Accounting Policies and
Note 5, Segmental Analysis.
Our Results
Our audit testing did not identify any material
misstatements in the revenue recognised during
the year or any instances of material revenue not
being recognised in accordance with the Group’s
accounting policies.
Relevant Disclosures in the Annual
Report 2022
l Financial Statements:
Note 28, Business Combinations
Our Results
Our audit testing did not identify any material
misstatements in the valuation of intangible assets
on recognition of the acquired businesses. We are
satisfied that the judgements made in determining the
split between acquired intangible assets and goodwill
are reasonable.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Report of the Independent Auditor (continued)
Financial Statements 46/47
Key Audit Matter – Group
How our scope addressed the matter – Group
Impairment of intangible assets in
relation to the Monmouth CGu
In responding to the key audit matter, we performed
the following audit procedures:
We identified the risk of impairment in relation to
the Monmouth CGU as one of the most significant
assessed risks of material misstatement due to error.
l obtained an understanding of the process followed
for the impairment assessment and tested the
design and implementation of relevant controls;
This is due to the Monmouth CGU having the lowest
headroom and the level of management judgement
and assumptions required to perform the annual
impairment test required under IAS 36 ‘Impairment
of Assets’. As a result, there is a risk that the carrying
value of the CGU may exceed its recoverable
amount and therefore be subject to impairment.
Relevant Disclosures in the Annual
Report 2022
l Financial statements:
Note 10, Intangible Assets.
l obtained management’s model to identify the key
assumptions and assess the arithmetical accuracy
of the model. The assumptions identified have been
challenged and corroborated by the audit team
to ensure they are reasonable and in line with the
requirements of IAS 36;
l used an auditor’s expert to recalculate a range
for the discount rate applied and to confirm the
reasonableness of key inputs and assumptions used
in management’s model, which led to a change in
management’s base case model;
l assessed the impairment review prepared by
management, mainly through the use of applying
sensitivities; and
l performed sensitivity analyses on the key assumptions
and inputs into the value in use calculations.
Key Observations
Based on our audit work, there is no material
impairment of the Monmouth CGU, but there are
reasonably possible changes in assumptions which
could cause an impairment. These have been
appropriately disclosed by management in the
financial statements.
We did not identify any key audit matters relating to the audit of the parent company.
Our Application of Materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified
misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the
opinion in the auditor’s report.
Materiality was determined as follows:
Materiality Measure Group
Parent Company
Materiality for
financial statements
as a whole
We define materiality as the magnitude of misstatement in the financial statements that,
individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of these financial statements. We use materiality in determining the
nature, timing and extent of our audit work.
Materiality
threshold
£503,000, which is 5% of the Group’s profit
before tax at the planning stage of the audit.
£377,000, which is 2% of the parent company’s
total assets at the planning stage of the audit,
capped due to the aggregate of the Group’s
significant component materialities exceeding
the firm’s permitted multiple.
Significant
judgements
made by auditor
in determining
materiality
In determining materiality, we made the
following significant judgements:
In determining materiality, we made the
following significant judgements:
l Profit before tax is considered the most
appropriate benchmark because the Group
is a commercially focused organisation and
profit before tax is a key financial measure
for the directors and the shareholders.
l We used a measurement percentage of 5%
as the Group’s profit before tax is relatively
stable and therefore we have used the top
of the firm’s permissible range.
Materiality for the current year is higher than
the level that we determined for the year
ended 30 April 2021 to reflect the improved
trading performance this year.
l An asset-based benchmark was
considered the most appropriate
benchmark because the parent company
is a holding company. This was changed
from 10% of profit before tax in the prior
year because total assets is a more
relevant benchmark for a parent company
that does not trade in its own right.
l We used a measurement percentage of 2%
as the parent company’s total assets are
relatively stable and therefore we have used
the top of the firm’s permissible range.
Materiality for the current year is higher than
for the year ended 30 April 2021 to reflect
the change in benchmark and measurement
percentage from 10% of the parent company’s
profit before tax last year, as noted above.
Performance
materiality used to
drive the extent of
our testing
We set performance materiality at an amount less than materiality for the financial
statements as a whole to reduce to an appropriately low level the probability that the
aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole.
Performance
materiality
threshold
£377,000, which is 75% of financial
statement materiality.
£283,000, which is 75% of financial
statement materiality.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Report of the Independent Auditor (continued)
Financial Statements 48/49
Our Application of Materiality (continued)
An Overview of the Scope of Our Audit
Materiality Measure Group
Parent Company
In determining performance materiality, we
made the following significant judgements:
In determining performance materiality, we
made the following significant judgements:
l that there were no significant adjustments
l that there were no significant adjustments
identified in the 2021 audit; and
identified in the 2021 audit; and
l that management are judged to be
suitably qualified and experienced.
l that management are judged to be
suitably qualified and experienced.
Significant
judgements
made by auditor
in determining
performance
materiality
Specific Materiality
Specific Materiality We determined a lower level of specific
materiality for the following areas:
We determined a lower level of specific
materiality for the following areas:
l directors’ remuneration; and related
l directors’ remuneration; and related
party transactions.
party transactions.
Communication of
misstatements to
the audit committee
We determine a threshold for reporting unadjusted differences to the audit committee
Threshold for
communication
£25,000 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
£19,000 and misstatements below that
threshold that, in our view, warrant
reporting on qualitative grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the tolerance
for potential uncorrected misstatements.
Overall Materiality – Group
Overall Materiality – Parent Company
Draft Profit
before Tax
£10m
PM
£377,000
75%
FSM
£503,000
5%
Total Assets
£44m
PM
£283,000
75%
FSM
£377,000
2%
TFPUM
£126,000
25%
TFPUM
£94,000
25%
FSM: Financial statements materiality, PM: Performance materiality, TFPuM: Tolerance for potential uncorrected misstatements
We performed a risk-based audit that requires an understanding of the Group’s and the parent company’s business and
in particular matters related to:
understanding the group, its components, and their environments, including group-wide controls
l the engagement team obtained an understanding of the Group and its environment, including Group-wide controls,
and assessed the risks of material misstatement at the Group level;
l the engagement team obtained an understanding of the Group’s organisational structure and considered its effect
on the scope of the audit, identifying that the Group financial reporting system is centralised;
Identifying significant components
l Significant components were identified through assessing their relative share of key financial metrics including
revenue, profit before tax, fixed assets, current assets and current liabilities.
Type of work to be performed on financial information of parent and other components (including how it addressed
the key audit matters)
l We identified five significant components within the Group and performed a full scope audit on the financial
information of each. Our work on these significant components included the areas of focus identified as key audit
matters above.
l We performed an audit of one or more account balances, classes of transactions or disclosures of the component
(specific-scope audit) for the eight non-significant UK Group components.
l Analytical procedures were performed for insignificant components.
Performance of Our Audit
Testing has been performed over the following key areas of the Group.
Audit
Approach
no. of
Components
% Coverage of
Total Assets
% Coverage of
Revenue
% Coverage
of PBT
Full scope audit
(Significant components)
Specific-scope audit
(non-significant uK entities)
Analytical procedures
5
8
9
74%
23%
3%
54%
40%
6%
73%
25%
2%
In the current year, the Group engagement team made site visits to all significant components and entities which were
subject to specific-scope audits.
Communications with Component Auditors
The Group audit team communicated with one overseas component auditor performing a full-scope audit throughout
the stages of their work, from planning, through fieldwork and as part of the concluding procedures.
Changes in Approach from Previous Period
There were no changes in approach from the prior period.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Report of the Independent Auditor (continued)
Financial Statements 50/51
Other Information
The directors are responsible for the other information. The other information comprises the information included
in the Annual Report 2022, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement of the financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact.
We have nothing to report in this regard.
Our opinion on other matters prescribed by the Companies Act 2006 is unmodified
In our opinion, based on the work undertaken in the course of the audit:
l the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
l the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matter on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the Group and the parent company and its environment obtained in
the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us
to report to you if, in our opinion:
l a adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
l the parent company financial statements are not in agreement with the accounting records and returns; or
l certain disclosures of directors’ remuneration specified by law are not made; or
l we have not received all the information and explanations we require for our audit.
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control
as the directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent company’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or the parent company or to
cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting
Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
Owing to the inherent limitations of an audit, there is an unavoidable risk that material misstatements in the financial
statements may not be detected, even though the audit is properly planned and performed in accordance with ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
l We obtained an understanding of the legal and regulatory frameworks that are most applicable to the Group and
the parent company and determined the most significant are those that relate to the financial reporting framework,
being the Companies Act 2006 and UK-adopted international accounting standards for the Group, and the
Companies Act 2006 and FRS 101 ‘Reduced disclosure framework’ for the parent company, together with relevant
tax compliance regulations. In addition, we concluded that there are certain other significant laws and regulations
that may have an effect on the determination of the amounts and disclosures in the financial statements, being laws
and regulations relating to health and safety, employee matters, and bribery and corruption practises.
l We obtained an understanding of how the Group and the parent company are complying with legal and regulatory
frameworks by making enquiries of management, those responsible for legal and compliance procedures and the
company secretary. We corroborated our enquiries through our review of Board minutes and papers provided to the
Audit Committee.
l We enquired of management and the Audit Committee about the Group’s policies and procedures relating to the
identification, evaluation and compliance with laws and regulations and the detection and responsible to the risks
of fraud and the establishment of internal controls to mitigate risks related to fraud or non-compliance with laws
and regulations.
l We assessed the susceptibility of the Group’s financial statements to material misstatement, including how fraud
might occur, by evaluating management’s incentives and opportunities for manipulation of the financial statements.
This included the evaluation of the risk of management override of controls. We determined that the principal risks
were in relation to areas of increased management judgement, specifically share-based payments, acquisition
accounting and the impairment of intangible assets, all of which could be impacted by management bias, as well as
the risk of fraud through the use of journal entries that increase revenues.
l Audit procedures performed by the engagement team included:
– Identifying and assessing the design and implementation of controls management has in place to prevent and
detect fraud;
– Obtaining an understanding of how those charged with governance considered and addressed the potential for
management override of controls or other inappropriate influence over the financial reporting process;
– Identifying and testing journal entries, in particular any journal entries posted with unusual account
combinations; and
– Challenging assumptions and judgements made by management in its significant accounting estimates.
l These audit procedures were designed to provide reasonable assurance that the financial statements were free
from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than
detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional
misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and
transactions reflected in the financial statements, the less likely we would become aware of it.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Report of the Independent Auditor (continued)
Financial Statements
Financial Statements 52/53
l The engagement partner’s assessment of the appropriateness of the collective competence and capabilities of the
engagement team included consideration of the engagement team’s:
– understanding of, and practical experience with, audit engagements of a similar nature and complexity, through
appropriate training and participation;
– knowledge of the industry in which the Group and the parent company operate; and
– understanding of the legal and regulatory frameworks applicable to the Group and the parent company.
l Relevant laws and regulations and potential fraud risks were communicated to all engagement team members.
We remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
l We enquired of the component auditor to request details of any instances of non-compliance with laws and
regulations that could give rise to a material misstatement of the Group financial statements.
use of Our Report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as
a body, for our audit work, for this report, or for the opinions we have formed.
David White
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants, Cambridge
21 July 2022
Contents
54 Consolidated Income Statement &
Statement of Comprehensive Income
55 Consolidated Balance Sheet
56 Consolidated Statement of Cash Flows
57 Consolidated Statement of Changes in Equity
58 Notes to the Consolidated Financial Statements
90 Company Balance Sheet
91 Company Statement of Changes in Equity
92 Notes to the Company Financial Statements
99 Seven-Year Summary
100 Shareholder Information
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Consolidated Income Statement &
Statement of Comprehensive Income
for the year ended 30 April 2022
Revenue
Cost of sales
Gross profit
Other income
Operating expenses
Operating profit
Net financing expenses
Profit before tax
Income tax
Profit for the year
Statement of Comprehensive Income
Profit for the year
Other comprehensive income
Items that will subsequently be reclassified to profit and loss:
Exchange differences on translating foreign operations
Total comprehensive income for the year
Earnings per share
Basic earnings per share
Diluted earnings per share
Note
5
14
4
8
6
9
Note
23
23
2022
£’000
2021
£’000
49,656
(17,998)
31,658
35,076
(12,206)
22,870
55
(21,534)
10,179
21
(16,960)
5,931
(295)
(287)
9,884
5,644
(2,341)
(936)
7,543
4,708
2022
£’000
2021
£’000
7,543
4,708
(46)
7,497
(96)
4,612
2022
£’000
7.53p
7.23p
2021
£’000
4.81p
4.58p
All activities of the Group are classed as continuing.
The results attributable to business combinations in the year are disclosed in note 29.
The accompanying accounting policies and notes form an integral part of these financial statements.
Consolidated Balance Sheet
as at 30 April 2022
54/55
Company registration number: 06385396
Note
2022
£’000
2021
£’000
Assets
Intangible assets
Property, plant and equipment
Right-of-use leased assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Borrowings
Deferred tax liability
Current liabilities
Trade and other payables
Provisions for warranties
Borrowings
Current tax payable
Total liabilities
Net assets
Equity
Share capital
Merger reserve
Merger relief reserve
Share premium account
Share-based payment reserve
Foreign exchange reserve
Retained earnings
Total equity
10
11
12
14
15
16
17
20
14
18
19
20
22
36,035
4,074
7,305
1,586
49,000
7,273
7,544
5,106
19,923
68,923
26,237
1,733
2,398
1,697
32,065
6,059
6,743
3,836
16,638
48,703
(10,656)
(4,417)
(15,073)
(16,089)
(163)
(779)
(1,027)
(18,058)
(33,131)
(3,764)
(2,479)
(6,243)
(12,826)
(230)
(1,880)
(750)
(15,686)
(21,929)
35,792
26,774
1,022
2,606
424
9,905
320
39
21,476
984
2,606
424
9,092
714
85
12,869
35,792
26,774
The financial statements were approved and authorised for issue by the Board of Directors on 21 July 2022.
Mike Creedon
Director
Jon Abell
Director
The accompanying accounting policies and notes form an integral part of these financial statements.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Consolidated Statement of Cash Flows
as at 30 April 2022
Consolidated Statement of Changes in Equity
as at 30 April 2022
56/57
Operating activities
Net profit for the year
Depreciation
Amortisation
Finance costs and income
Impairment of intangible assets
Decrease in provisions
Taxation in the income statement
Employee share-based payments
Operating cash flows before movement in working capital
Decrease in inventories
Decrease/(increase) in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Interest paid
Income taxes paid
Cash generated from operating activities
Investing activities
Capital expenditure on fixed assets
Sale of property, plant and equipment
Expenditure on development and other intangibles
Acquisition of subsidiaries, net of cash
Net cash used in investing activities
Financing activities
Finance leases net repayments
Proceeds from bank borrowing
Repayment of borrowings
Issues of shares and proceeds from option exercise
Net cash from/(used in) financing
Net changes in cash and cash equivalents
Cash and cash equivalents, beginning of year
Foreign currency movements on cash balances
Cash and cash equivalents, end of year
Note
2022
£’000
2021
£’000
11 & 12
10
8
10
19
11
10
29
20
20
20
22
7,543
1,197
1,576
295
30
(97)
2,341
313
13,198
(365)
652
1,204
14,689
(295)
(1,290)
13,104
(1,426)
66
(415)
(10,995)
(12,770)
4,708
973
1,589
287
130
(15)
936
305
8,913
(977)
(2,363)
6,137
11,710
(287)
(1,166)
10,257
(667)
67
(367)
(4,057)
(5,024)
(583)
9,000
(8,086)
651
982
(489)
5,404
(11,652)
155
(6,582)
1,316
(1,349)
3,836
(46)
5,106
5,290
(105)
3,836
Share
capital
£’000
Merger
reserve
£’000
Merger
relief
reserve
£’000
Foreign
exchange
£’000
Share
premium
£’000
Share-
based
payment
reserve
£’000
Retained
earnings
£’000
Total
£’000
Balance at 30 April 2021
984
2,606
424
85
9,092
714
12,869
26,774
Shares issued
Tax in respect of share options
Share-based payment transfer
Share-based payment charge
Transactions with owners
Profit for the year
Foreign exchange on consolidation
of subsidiaries
Total comprehensive income for
the period
38
–
–
–
38
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 30 April 2022
1,022
2,606
424
–
–
–
–
–
–
(46)
(46)
39
813
–
–
–
813
–
–
–
–
–
(707)
313
(394)
–
357
707
–
1,064
851
357
–
313
1,521
–
–
–
7,543
7,543
–
(46)
7,543
7,497
9,905
320
21,476
35,792
Share
capital
£’000
Merger
reserve
£’000
Merger
relief
reserve
£’000
Foreign
exchange
£’000
Share
premium
£’000
Share-
based
payment
reserve
£’000
Retained
earnings
£’000
Total
£’000
Balance at 30 April 2020
(previously stated)
Restatement
Restated balance at 30 April 2020
Shares issued
Tax in respect of share options
Share-based payment transfer
Share-based payment charge
Transactions with owners
Profit for the year
Foreign exchange on consolidation
of subsidiaries
Total comprehensive income for
the period
975
–
975
3,030
(424)
2,606
–
424
424
181
–
181
8,746
–
8,746
9
–
–
–
9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
346
–
–
–
346
–
–
–
–
–
–
–
–
–
(96)
(96)
85
467
–
467
–
–
(58)
305
247
–
–
–
6,665
–
6,665
–
1,438
58
–
1,496
20,064
–
20,064
355
1,438
–
305
2,098
4,708
4,708
–
(96)
4,708
4,612
The accompanying accounting policies and notes form an integral part of these financial statements.
Balance at 30 April 2021
984
2,606
424
9,092
714
12,869
26,774
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements
for the year ended 30 April 2022
Financial Statements 58/59
1
2
Reporting Entity
SDI Group plc, a public limited company, is the Group’s ultimate parent. It is registered and
domiciled in England and Wales. The consolidated financial statements of the Group for the
year ended 30 April 2022 comprise the Company and its subsidiaries (together referred to
as the “Group”). The details of subsidiary undertakings are listed in note 4 to the Company
Financial Statements.
Basis of Preparation
The consolidated financial statements have been prepared and approved by the directors in
accordance with International accounting standards in conformity with the requirements of
the Companies Act 2006. The consolidated financial statements have been prepared under the
historical cost convention as modified by the recognition of certain financial instruments at
fair value.
The principal accounting policies of the Group are set out below.
The consolidated financial statements are presented in British pounds (£), which is also the
functional currency of the ultimate parent company. All values are rounded to the nearest
thousand (£’000) except where otherwise indicated.
Going concern
The consolidated financial statements have been prepared on a going concern basis. The Group’s
business activities, together with the factors likely to affect its future development, performance
and position are set out within this Strategic report. The financial position of the Group, its cash
flows, and liquidity position are provided in the financial statements on pages 54-57.
The Group ended 2022 with net cash of £1.1m compared to £0.7m at 30 April 2021 and generated
cash from Operations of £14.7m. This cash generation arose from the strong performance of the
Group’s principal operating companies, enabled by 21.6% organic growth, and was mostly
deployed in acquiring profitable businesses. In addition, the Group also refinanced its borrowing
facilities on 01 November 2021, extending the loan facility to £20m and the repayment date to
November 2024, providing the Group with greater certainty over long-term liquidity. An amount
totalling £4m is currently drawn down under this facility (see note 20).
The Board have considered the ongoing impacts of the Covid-19 pandemic and the war in Ukraine,
including their effects on the wider economy. The Group is in a strong financial position with high
cash balances and available facilities, sufficient headroom on all covenants associated with the
debt, good profitability and a strong future order book, enabling it to face any reasonable likely
challenge of the continued uncertain global economic environment. The Board has reviewed
forecasts for the period to 31 October 2024, including severe downside scenarios which the Board
considers extremely unlikely and would not cause any significant challenges to the Group’s
continued existence.
The Board therefore have a reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future and therefore continue to adopt the
going concern basis in preparing the Annual Report and Accounts.
Changes in accounting policies
At the date of approval of these financial statements, certain new standards, amendments to and
interpretations of existing standards have been published but are not yet effective. None of these
pronouncements have been adopted early by the Group, and they have not been disclosed as they
are not expected to have a material impact on the Group’s financial statements. Management
anticipates that all pronouncements will be adopted for the first period beginning on or after their
effective date.
Accounting judgements and estimates
The preparation of financial statements requires management to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets, liabilities,
income and expenses. These judgements and estimates are based on management’s best
knowledge of the relevant facts and circumstances, having regard to prior experience, but actual
results may differ from the amounts included in the consolidated financial statements.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised and in any future periods
affected. Information about significant areas of estimation uncertainty and critical judgements in
applying accounting policies that have the most significant effect on the amount recognised in the
financial statements are described in the following notes:
Judgements in applying accounting policies
Intangibles – development costs
The Group is required to capitalise any development costs that meet the criteria as per IAS 38.
(See Research and Development accounting policy, page 61 and in note 10). The point at which
development costs meet the criteria for capitalisation is critically dependent on management’s
judgement of the point at which technical feasibility is demonstrable. The carrying value of
development assets also depends on management’s ability to demonstrate the future economic
benefits they will deliver. This judgement requires assumptions about factors outside the business’s
control such as medium-term economic conditions, technological developments and market
changes. The Group tests annually whether the capitalised development costs have been impaired
by reference to expected future generation of cash from the technologies developed and the
timing of when these will be released.
Sources of estimation uncertainty
Fair value assessments of business combinations
Following an acquisition, management makes an assessment of the fair value of all assets and
liabilities acquired, including intangible assets and goodwill. The valuation process requires a
number of estimates to be made, including an estimate of any earnout cash payment which is
contingent on specific performance targets being met. For details of assumptions, see note 29.
Carrying value of goodwill and other intangible assets
The impairment analysis of intangible assets is based upon future discounted cash flows and a
number of assumptions are made to estimate the future cash flows expected to arise from the cash
generating unit as well as a suitable discount rate in order to calculate present value. Factors like
lower than anticipated sales and resulting decreases of net cash flows and changes in discount
rates could lead to impairment. For details of assumptions see note 10.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 60/61
3
Principal Accounting Policies
The principal accounting policies adopted are consistent with those of the annual financial
statements for the year ended 30 April 2021.
Basis of consolidation
Subsidiaries are entities controlled by the Group where control is the power to govern the financial
and operating policies of an entity so as to obtain benefits from its activities. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that
control commences until the date that control ceases. The subsidiaries financial statements have
been prepared in accordance with FRS 101.
Intra group balances and any unrealised income and expenses arising from intra group transactions
are eliminated in preparing the consolidated financial statements.
Business combinations
Business combinations are accounted for using the acquisition method under the revised
IFRS 3 Business combinations. The consideration transferred by the Group to obtain control of a
subsidiary is calculated as the sum of the acquisition-date fair value of assets transferred, liabilities
incurred, and the equity interests issued by the Group, which includes the fair value of any asset or
liability arising from a contingent consideration agreement. Acquisition costs are expensed within
administration expenses as incurred. The Group recognises identifiable assets acquired and
liabilities assumed including contingent liabilities in a business combination regardless of whether
they have been previously recognised in the acquiree’s financial statements prior to the acquisition.
Assets acquired and liabilities assumed are generally measured at their acquisition-date fair values.
Foreign currency
Transactions entered into by Group entities in a currency other than the functional currency
of the company which incurred them are recorded at the rate of exchange at the time of the
transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet
date are reported at the rates of exchange prevailing at that date. Exchange differences arising on
the retranslation of unsettled monetary assets and liabilities are recognised immediately in the
income statement.
For the purpose of presenting the consolidated financial statements the assets and liabilities of
the Group’s overseas operations are translated using exchange rates prevailing on the balance
sheet date. Exchange differences on net assets arising from this policy are recognised in other
comprehensive income and accumulated in the foreign exchange reserve; such translation
differences are reclassified from equity to profit or loss as a reclassification adjustment in the
period in which the foreign operation is disposed of.
Income and expense items of overseas operations are translated at exchange rates approximating
to those ruling when the transactions took place.
Property, plant and equipment
Property, plant and equipment is stated at cost, less accumulated depreciation. Depreciation is
charged to the income statement on a straight-line basis over the estimated useful lives of each
part of property, plant and equipment to write down the cost of the asset to its residual value.
The estimated useful lives are as follows:
Motor vehicles
Computer equipment
Tools and other equipment
Furniture, fixtures and fittings
Building and leasehold improvements
3 years
3 years
3 years
5 years
Over the lease term
Goodwill
Goodwill represents the excess of the fair value of the consideration transferred over the Group’s
interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the
acquiree. When the excess is negative, it is recognised immediately in the income statement as a
gain from a bargain purchase. Goodwill is reviewed for impairment annually or more frequently if
events or changes in circumstances indicate that the carrying value may be impaired. Goodwill is
also reviewed for impairment immediately following an acquisition. The impairment of goodwill is
based upon value in use, determined using estimated future discounted cash flows.
Research and development
Expenditure on research activities undertaken with the prospect of gaining new scientific or
technical knowledge and understanding is recognised in the income statement as an expense
as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design
for the production of new or substantially improved products and processes, is capitalised if the
following conditions are met:
l Completion of the intangible asset is technically feasible so that it will be available for use or sale;
l The Group intends to complete the intangible assets and use or sell it;
l The Group has the ability to use or sell the intangible asset;
l The intangible asset will generate probable future economic benefits. Among other things,
this requires that there is a market for the output from the intangible asset or the intangible asset
itself, or, if it is to be used internally, the asset will be used for generating such benefits; and
l The expenditure attributable to the intangible asset during its development can be
measured reliably.
The expenditure capitalised includes direct cost of material, direct labour and an appropriate
proportion of overheads. Other development expenditure is recognised in the income statement
as an expense as incurred. Capitalised development is stated at cost less accumulated amortisation
and impairment losses.
Amortisation is charged to the income statement on a straight-line basis over the estimated useful
lives of intangible assets. Amortisation is shown within administrative expenses in the income
statement. The estimated useful lives of current development projects are three years. Until
completion of the project the assets are subject to impairment testing.
Other intangible assets
Intangible assets acquired as part of an acquisition of a business are capitalised separately from
goodwill providing the assets are separable or they arise from contractual or other legal rights and
their fair value can be measured reliably. The fair value of intangible assets in a business
combination includes the value of any tax benefit.
Intangible assets with a finite life are amortised over their useful economic lives. Amortisation is
recognised in the income statement within administrative expenses on a straight-line basis over the
estimated useful lives of intangible assets, other than goodwill, from the date that they are available
for use.
Capitalised development costs
Other intangible assets
Customer relationships and trademarks
Order book
3 years
3-15 years
15 years
Up to 2 years
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 62/63
3
Principal Accounting Policies (continued)
Impairment
The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax
assets, are reviewed at each reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For
intangible assets that have indefinite lives or that are not yet available for use, the recoverable
amount is estimated at each reporting date.
The recoverable amount of an asset is the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money
and the risks specific to the asset.
For the purpose of assessing impairment, assets are grouped at the lowest levels for which there
are largely independent cash flows (cash-generating units). As a result, some assets are tested
individually for impairment, and some are tested at cash-generating unit level.
Goodwill is allocated to those cash-generating units or groups of cash-generating units that are
expected to benefit from synergies of the related business combination, typically the Group’s
operating segments, which represent the lowest level within the Group at which management
monitors goodwill.
An impairment loss is recognised if the carrying amount of an asset exceeds its recoverable
amount. Impairment losses are recognised in the income statement. Impairment losses for cash-
generating units reduce first the carrying value of any goodwill allocated to that cash generating
unit. Any remaining impairment loss is charged pro rata to the other assets in the cash-generating
unit. With the exception of goodwill, all assets are subsequently reassessed for indicators that an
impairment loss previously recognised may no longer exist.
Any impairment in respect of goodwill is not reversed. Impairment losses on other assets
recognised in prior periods are assessed at each reporting date for any indications that the loss has
decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the
extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment had been recognised.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories
comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventories to their location and condition at the balance sheet date. Items are valued using the first
in, first out method. When inventories are used, the carrying amount of these inventories is
recognised as an expense in the period in which the related revenue is recognised. Provisions for
write-down to net realisable value and losses of inventories are recognised as an expense in the
period in which the write-down or loss occurs.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and deposits which are subject to an
insignificant risk of changes in value.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost. Any difference between the proceeds and the redemption
value is recognised in the income statement over the period of the borrowings using the effective
interest method. Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liabilities for at least 12 months after the balance
sheet date.
Equity
Equity comprises the following:
l “Share capital” represents the nominal value of equity shares
l “Merger reserve” represents the difference between the parent company’s cost of investment
and the subsidiary’s share capital and share premium where a group reorganisation qualifies as a
common control transaction.
l “Share premium account” represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issue.
l “Share-based payment reserve” represents equity-settled share-based employee remuneration
until such share options are exercised. The equity component of convertible loan stock, if any, is
also included. On conversion of the loan stock the equity component is transferred into the
retained earnings reserve.
l “Foreign exchange reserve” represents the differences arising from translation of investments in
overseas subsidiaries.
l “Retained earnings” represents retained profits.
Contributions to pension schemes
Defined Contribution Scheme
Obligations for contributions for defined contribution plans are recognised as an expense in the
income statement when they are due.
Financial assets
The Group’s financial assets comprise trade receivables, other receivables, cash and cash
equivalents. Trade and other receivables are recognised and carried at the original invoice amount
less a provision for the expected credit loss. Management have adopted the simplified model to
determine the expected credit loss on trade receivables and uses historical experience of losses
applied to the specific circumstances of the receivable, including trading history with the debtor
and period overdue to determine the need for and amount of any provision to cover expected
future losses. Uncollectable amounts are written off to the Income Statement when identified.
Financial liabilities
Financial liabilities are obligations to pay cash or other financial assets and are recognised when the
Group becomes a party to the contractual provisions of the instrument. The Group’s financial
liabilities comprise trade payables, other payables, other loans and bank borrowings. All financial
liabilities are measured at fair value plus transaction costs on initial recognition and subsequently
are measured at amortised cost. Contingent consideration assumed in a business combination is
measured initially at fair value through profit and loss in the income statement at the acquisition
date and any contingent liability is classified as a liability within the balance sheet.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 64/65
3
Principal Accounting Policies (continued)
Revenue recognition
In accordance with IFRS 15 ‘Revenues from Contracts with Customers’, revenue is measured by
reference to the fair value of consideration received or receivable by the Group, excluding value
added tax (or similar local sales tax), in exchange for transferring the promised goods or services to
the customer. The consideration is allocated to each separate performance obligation that is
identified in a sales contract, based on stand-alone selling prices. Sales of instruments and spare
parts, and sales of services, such as non-specialised installation or maintenance work, are assessed
to be separate performance obligations.
Revenue is recognised when (or as) the Group satisfies the identified performance obligation. For
sales of instruments and spare parts, the performance obligation is satisfied at a point in time; for
revenue from services, the performance obligation is satisfied over time. As the period of time
between payment and performance is less than one year, the Group does not adjust revenue for
the effects of financing.
Revenue from sales of instruments and spare parts is recognised at the point at which the
customer obtains control of the asset. This is usually when the customer receives the goods or
when goods are collected by the customer. Revenue from installations is recognised at the point
which the installation is completed. For large, complex instruments which require highly specialised
installation, revenue from both the instrument and installation is recognised at the point which
installation is completed.
Revenue from maintenance work relates to service visits carried out on equipment provided to
customers whereby the performance obligation is to carry out service visits over a period of time.
It is a separate, distinct, individually identified performance obligation and is recognised straight-
line over the length of the service contract being provided as this reflects the inputs and efforts
(service employees) which are expended evenly throughout the performance period (length of t
he contract).
Leased assets
The Group makes the use of leasing arrangements principally for the provision of the main
warehouse and related facilities, office space, IT equipment and motor vehicles. The rental
contracts for offices are typically negotiated for terms of between 5 and 20 years and some of
these have extension terms. Lease terms for office fixtures and equipment and motor vehicles
have lease terms of between 6 months and 5 years without any extension terms. The Group does
not enter into sale and leaseback arrangements. All the leases are negotiated on an individual basis
and contain a wide variety of different terms and conditions such as purchase options and
escalation clauses.
The Group assesses whether a contract is or contains a lease at inception of the contract. A lease
conveys the right to direct the use and obtain substantially all of the economic benefits of an
identified asset for a period of time in exchange for consideration.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability
in its consolidated statement of financial position. The right-of-use asset is measured at cost,
which is made up of the initial measurement of the lease liability, any initial direct costs incurred
by the Group, an estimate of any costs to dismantle and remove the asset at the end of the lease,
and any lease payments made in advance of the lease commencement date (net of any
incentives received).
The Group depreciates the right-of-use asset on a straight-line basis from the lease commencement
date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
The Group also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the Group’s incremental borrowing rate because as
the lease contracts are negotiated with third parties it is not possible to determine the interest rate
that is implicit in the lease.
The incremental borrowing rate is the estimated rate that the Group would have to pay to borrow
the same amount over a similar term, and with similar security to obtain an asset of equivalent
value. This rate is adjusted should the lessee entity have a different risk profile to that of the Group.
Lease payments included in the measurement of the lease liability are made up of fixed payments
(including in substance fixed), variable payments based on an index or rate, amounts expected to
be payable under a residual value guarantee and payments arising from options reasonably certain
to be exercised.
Subsequent to initial measurement, the liability will be reduced by lease payments that are
allocated between repayments of principal and finance costs. The finance cost is the amount that
produces a constant periodic rate of interest on the remaining balance of the lease liability.
The lease liability is reassessed when there is a change in the lease payments. Changes in lease
payments arising from a change in the lease term or a change in the assessment of an option to
purchase a leased asset. The revised lease payments are discounted using the Group’s incremental
borrowing rate at the date of reassessment when the rate implicit in the lease cannot be readily
determined. The amount of the remeasurement of the lease liability is reflected as an adjustment to
the carrying amount of the right-of-use asset. The exception being when the carrying amount of
the right-of-use asset has been reduced to zero then any excess is recognised in profit or loss.
To respond to business needs particularly in the demand for office space, the Group will enter into
negotiations with landlords to either increase or decrease available office space or to renegotiate
amounts payable under the respective leases. In some instances, the Group is able to increase
office capacity by taking additional floors available and therefore agrees with the landlord to pay
an amount that is commensurate with the stand-alone pricing adjusted to reflect the particular
contract terms. In these situations, the contractual agreement is treated as a new lease and
accounted for accordingly.
In other instances, the Group is able to negotiate a change to a lease such as reducing the amount
of office space taken, reducing the lease term or by reducing the total amount payable under the
lease. Both of which were not part of the original terms and conditions of the lease. In these
situations, the Group does not account for the changes as though there is a new lease. Instead,
the revised contractual payments are discounted using a revised discount rate at the date the
parties agree to the modification. For the reasons explained above, the discount rate used is the
Group’s incremental borrowing rate determined at the modification date, as the rate implicit in
the lease is not readily determinable.
The remeasurement of the lease liability is dealt with by a reduction in the carrying amount of the
right-of-use asset to reflect the full or partial termination of the lease for lease modifications that
reduce the scope of the lease. Any gain or loss relating to the partial or full termination of the lease
is recognised in profit or loss. The right-of-use asset is adjusted for all other lease modifications.
Taxation
Income tax expense comprises current and deferred tax.
The tax currently payable is based on the taxable profit for the year. Current tax is recognised in
profit or loss, except that current tax relating to items recognised in other comprehensive income
is recognised in other comprehensive income and current tax relating to items recognised directly
in equity is recognised in equity. Taxable profit differs from profit as reported in the income
statement because it excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 66/67
3
Principal Accounting Policies (continued)
Taxation (continued)
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit
It is accounted for using the balance sheet liability method. However, deferred tax is not provided
on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the
related transaction is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with investments in subsidiaries is not provided
if reversal of these temporary differences can be controlled by the Group or it is probable that
reversal will not occur in the foreseeable future. Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which the temporary difference can be utilised.
The carrying value of deferred tax asset is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow part or all
of the assets to be recovered.
Deferred tax is calculated using tax rates that are enacted or substantively enacted at the balance
sheet date. Deferred tax is charged or credited to the income statement, except when it relates
to items charged or credited directly to equity, in which case the deferred tax is also dealt with in
equity. Deferred tax relating to items recognised in other comprehensive income is recognised
in other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off
current tax assets against current tax liabilities and when they relate to income taxes levied by
the same taxation authority and the Group intends to settle its current tax assets and liabilities on
a net basis.
Segment reporting
The Group identifies operating segments based on internal management reporting that is regularly
reviewed by the chief operating decision maker. The chief operating decision maker is the
Executive Board of Directors.
Provisions
Provisions are recognised when present obligations as a result of a past event will probably lead to
an outflow of economic resources from the Group and the amounts can be estimated reliably.
A provision for warranties is recognised when the underlying products are sold. The provision is
based on historical warranty data and a weighting of possible outcomes against their associated
probabilities.
Share-based payments
SDI Group plc regularly issues share options to employees. The fair value of the award granted is
recognised as an employee expense within the Income Statement with a corresponding increase in
equity. The fair value is measured at the grant date and allocated over the vesting period based on
the best available estimate of the number of share options expected to vest. Estimates are
subsequently revised if there is any indication that the number of share options expected to vest
differs from previous estimates.
The fair value of the grants is measured using the Black-Scholes model or a Monte Carlo simulation
as appropriate, taking into account the terms and conditions upon which the grants were made.
Alternative Performance Measures
4
The Group uses Adjusted Operating Profit, Adjusted Profit Before Tax, Adjusted Diluted EPS and Net
Operating Assets as supplemental measures of the Group’s profitability and investment in business-
related assets, in addition to measures defined under IFRS. The Group considers these useful due to
the exclusion of specific items that are considered to hinder comparison of underlying profitability
and investments of the Group’s segments and businesses and is aware that shareholders use these
measures to evaluate performance over time. The adjusting items for the alternative measures of
profit are either recurring but non-cash charges (share-based payments and amortisation of
acquired intangible assets) or exceptional items (reorganisation costs and acquisition costs).
The following table is included to define the term Adjusted Operating Profit:
Operating Profit (as reported)
Adjusting items (all costs):
Non-underlying items
Share-based payments
Amortisation of acquired intangible assets
Exceptional items
Reorganisation costs
Acquisition costs
Total adjusting items
Adjusted Operating Profit
Adjusted Profit Before Tax is defined as follows:
Profit before tax (as reported)
Adjusting items (all costs):
Non-underlying items
Share-based payments
Amortisation of acquired intangible assets
Exceptional items
Reorganisation costs
Acquisition costs
Total adjusting items
Adjusted Profit Before Tax
2022
£’000
2021
£’000
10,179
5,931
313
1,115
125
341
1,894
305
1,153
132
179
1,769
12,073
7,700
2022
£’000
2021
£’000
9,884
5,644
313
1,115
125
341
1,894
305
1,153
132
179
1,769
11,778
7,413
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 68/69
4
Alternative Performance Measures (continued)
Segment Analysis
5
Adjusted EPS is defined as follows:
Profit for the year
Adjusting items (all costs):
Non-underlying items
Share-based payments
Amortisation of acquired intangible assets
Exceptional items
Reorganisation costs
Acquisition costs
Total adjusting items
Less taxation on adjusting items calculated at the UK statutory rate
Adjusted profit for the year
2022
£’000
7,543
313
1,115
125
341
1,894
(360)
9,077
2021
£’000
4,708
305
1,153
132
179
1,769
(336)
6,141
Divided by diluted weighted average number of shares in issue
(note 23)
104,259,085
102,799,084
Adjusted Diluted EPS
8.71p
5.97p
The following table is included to define the term Net Operating Assets:
Net assets
Deferred tax asset
Corporation tax asset
Cash and cash equivalents
Borrowings and lease liabilities (current and non-current)
Deferred & contingent consideration
Deferred tax liability
Current tax payable
Total adjusting items within Net assets
2022
£’000
2021
£’000
35,792
26,774
1,586
137
5,106
(11,435)
(3,305)
(4,417)
(1,027)
(13,355)
1,697
17
3,836
(5,644)
(2,350)
(2,479)
(750)
(5,673)
Net Operating Assets
49,147
32,447
The Digital Imaging segment incorporates the Synoptics brands Syngene, Synbiosis, Synoptics
Health and Fistreem, the Atik brands Atik Cameras, Opus and Quantum Scientific Imaging, and
Graticules Optics. These businesses share significant characteristics including customer application,
technology, and production location. Revenues derive from the sale of instruments, components
for OEM customers’ instruments, from accessories and service and from licence income.
The Sensors & Control segment combines our Sentek, Astles Control Systems, Applied Thermal
Control, Thermal Exchange, MPB Industries, Chell Instruments, Monmouth Scientific, Uniform
Engineering, Scientific Vacuum Systems and Safelab Systems businesses. All of these businesses
provide products that 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.
Revenues
Digital Imaging
Sensors & Control
Group
Adjusted Operating Profit
Digital Imaging
Sensors & Control
Other
Group
Amortisation of acquired intangible assets
Digital Imaging
Sensors & Control
Group
2022
Total
£’000
2021
Total
£’000
21,492
28,164
49,656
15,788
19,288
35,076
8,502
5,188
(1,617)
12,073
5,165
4,360
(1,825)
7,700
(175)
(940)
(1,115)
(175)
(978)
(1,153)
Adjusted Operating Profit has been defined in note 4.
Analysis of amortisation of acquired intangible assets has been included separately as the
Group considers it to be an important component of profit which is directly attributable to
the reported segments.
The Other category includes costs which cannot be allocated to the other segments and
consists principally of Group head office costs.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 70/71
5
Segment Analysis (continued)
The geographical analysis of revenue by destination, analysis of revenue by product or service,
and non-current assets by location are set out below:
Operating assets excluding acquired intangible assets
Digital Imaging
Sensors & Control
Other
Group
Acquired intangible assets
Digital Imaging
Sensors & Control
Group
Operating Liabilities
Digital Imaging
Sensors & Control
Other
Group
Net operating assets
Digital Imaging
Sensors & Control
Other
Group
Depreciation
Digital Imaging
Sensors & Control
Other
Group
Net Operating Assets has been defined in note 4.
2022
Total
£’000
2021
Total
£’000
7,501
19,045
247
26,793
7,895
9,683
131
17,709
5,019
30,282
35,301
5,195
20,251
25,446
(4,905)
(7,075)
(968)
(12,948)
(5,439)
(4,204)
(1,064)
(10,707)
7,616
42,251
(720)
49,147
7,650
25,731
(934)
32,447
474
717
7
1,198
461
505
7
973
Revenue by destination of external customer
United Kingdom (country of domicile)
Europe
America
China
Asia (excluding China)
Rest of World
Revenue by product or service
Instruments and spare parts
Services
2022
£’000
21,330
7,381
4,226
10,798
4,652
1,269
49,656
2022
£’000
48,253
1,403
49,656
21.7% of Group revenue (2021: 16%) was from a single customer during the year.
Analysis of revenue by performance obligation
Sale of goods, recognised at a point in time
Sale of services, recognised over time
Sale of goods, recognised over time
Non-current assets by location
United Kingdom
Portugal
America
2022
£’000
47,531
1,403
722
49,656
2022
£’000
46,721
586
107
47,414
2021
£’000
15,343
5,137
3,365
6,854
3,088
1,289
35,076
2021
£’000
34,640
436
35,076
2021
£’000
34,193
436
447
35,076
2021
£’000
29,824
396
148
30,368
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 72/73
Share-based employee remuneration
The company has two active EMI option schemes, “approved” and “unapproved”, which share
similar features, but may be treated differently regarding taxation of the option holder. Both
schemes have been approved by shareholders in general meetings. The approved scheme has
been approved by HM Revenue & Customs. The options can be exercised three years after the
share options are granted. Upon vesting, each option allows the holder to purchase one ordinary
share. The options lapse if share options remain unexercised after a period of 10 years after the
date of grant or if the employee leaves. During the year, 791,000 of such options were granted
under these schemes, at exercise prices ranging from £1.650 to £1.740. The weighted average
remaining contractual life of all outstanding options under these schemes is 6.35 years.
In addition, in December 2018, a Long-Term Incentive Plan (LTIP) was approved by the Board
of Directors. Under the terms of the grant, a proportion of the options will vest after three years,
depending on a) the ranking of Total Shareholder Return (TSR) to Group shareholders compared
with a basket of twenty comparator companies, and b) the earnings per share growth for the
Group over the three-year period. The exercise price for these options is 1p each, being the
nominal value of SDI shares.
A summary of options outstanding currently is as follows:
Options
outstanding
as at 1 May
2021
Scheme
Granted
Lapsed
Exercised
Options
outstanding
as at 30 April
2022
3,240,339
(1,284,667)
1,855,672
EMI, Approved
(1,000,000) 1,411,600
EMI, Unapproved 1,620,600 791,000
595,201
(1,389,129)
1,847,630 136,700
LTIP
6,708,569 927,700 (100,000) (3,673,796) 3,862,473
Total
(100,000)
–
–
–
Weighted
average
exercise
price
£0.808
£0.834
£0.010
£0.695
of which
exercisable
1,500,672
260,600
–
1,761,272
In accordance with IFRS 2, share-based compensation expense is calculated on the issue of
share options. For options under the LTIP scheme vesting based on TSR, a Monte Carlo
simulation performed is used to value the compensation expense. For the other options issued
during the year, the compensation expense was valued using the Black Scholes model, with the
following inputs:
l interest rate 1%-1.8%
l volatility 46%-48%
l expected life of option 3 years.
The charge for the year ended 30 April 2022 was £313k (2021: £305k).
6
Profit before Taxation
Profit for the year has been arrived at after charging:
Amortisation of intangible assets
Depreciation charge for the year – Right-of-use assets
Depreciation charge for the year – Other assets
Fees payable to the Company’s Auditor in respect of audit services:
– Audit of Group consolidated accounts
– Audit of Company’s subsidiaries pursuant to legislation
– Audit of overseas subsidiaries
Fees paid to the auditor and its associates in respect of other services:
– Audit related assurance services
Currency exchange (gain)/loss
Reorganisation costs
Acquisition costs
7
Directors’ and Employees’ Remuneration
Staff costs during the year were as follows:
Wages and salaries (including reorganisation costs and other termination
benefits £2k (2021: £36k))
Furlough income
Social security costs
Share-based payment charge
Employer’s National Insurance costs on share-based remuneration
Other pension costs
2022
£’000
1,576
549
649
30
265
15
12
(18)
125
341
2021
£’000
1,589
528
445
20
165
–
12
72
132
179
2022
£’000
2021
£’000
11,773
–
1,165
313
165
488
13,904
9,324
(273)
989
305
578
365
11,288
Key management for the Group is considered to be the directors of the Group. Remuneration of
directors is set out in the directors’ remuneration report on pages 34-35.
Total emoluments of £338k (2021: £283k) were paid to the highest paid director during the year.
Pensions
The Group operates defined contributions pension schemes for the benefit of the employees.
The assets of the schemes are administered by trustees in funds independent from those of the
Group. Total contributions for the Group were £488k (2021: £365k). At 30 April 2022, total pension
liabilities of £101k (2021: £76k) were owing.
The average number of employees of the Group during the year was:
Administration
Production
Product development
Sales and marketing
2022
Number
2021
Number
79
193
53
29
354
68
142
39
23
272
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 74/75
8
Finance Costs
Bank loans
Leases and hire purchase contracts
9
Taxation
Corporation tax:
Prior year corporation tax adjustment
Current tax charge
Deferred tax
Income tax charge
Reconciliation of effective tax rate
Profit on ordinary activities before tax
Profit on ordinary activities multiplied by standard rate of
Corporation tax in the UK of 19% (2021: 19%)
Effects of:
Expenses not deductible for tax purposes
Additional deduction for R&D expenditure
Prior year tax adjustments
Foreign tax rate
Remeasurement of unused tax losses in year at future tax rate
Update deferred tax liabilities and assets to enacted future tax rate of
25% (2021: 19%)
Other
2022
£’000
210
85
295
2021
£’000
204
83
287
2022
£’000
2021
£’000
38
1,141
1,179
1,162
2,341
–
1,220
1,220
(284)
936
2022
£’000
2021
£’000
9,884
5,644
1,878
1,072
61
(219)
38
54
(164)
728
(35)
2,341
30
(162)
(18)
–
–
–
14
936
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.
The UK Finance Act 2021 which was substantively enacted on 24 May 2021 included provisions to
increase the corporation tax rate to 25% effective from 1 April 2023 and this rate has been applied
when calculating the deferred tax at the year end.
Intangible Assets
The amounts recognised in the balance sheet relate to the following:
10
Cost
As at 1 May 2021
Additions
Additions on acquisition
Disposals/Eliminations
As at 30 April 2022
Amortisation
As at 1 May 2021
Amortisation for the year
Disposals/Eliminations
At 30 April 2022
Net book value
As at 30 April 2022
As at 30 April 2021
Customer
relationships
£’000
Other
intangibles
£’000
Goodwill
£’000
Development
costs
£’000
Total
£’000
12,468
–
4,139
–
16,607
2,095
913
–
3,008
1,694
–
716
–
2,410
790
214
–
1,004
13,973
–
6,134
–
20,107
–
–
–
–
2,860
415
–
(407)
2,868
1,873
449
(377)
1,945
30,995
415
10,989
(407)
41,992
4,758
1,576
(377)
5,957
13,599
10,373
1,406
904
20,107
13,973
923
987
36,035
26,237
Capitalised development costs include amounts totalling £31k (2021: £429k) relating to incomplete
projects for which amortisation has not yet begun.
Goodwill relates to various acquisitions and has been allocated to each cash generating unit as
appropriate. The cash generating units used to test impairment are generally the individual
acquired businesses, or, where these have been operationally merged with others, the resulting
merged businesses. Goodwill is not amortised but tested for impairment annually with the
recoverable amount being determined from value in use calculations. Goodwill has been allocated
for impairment testing to each Cash Generating Unit (CGU), as follows:
Synoptics
Atik
Graticules
Sentek
Astles Control Systems
Applied Thermal Control
MPB Industries
Chell Instruments
Monmouth Scientific incorporating Uniform Engineering and
Scientific Vacuum Systems
Safelab Systems
2022
£’000
453
1,229
1,278
1,282
2,503
1,028
630
2,492
3,207
2,444
3,561
20,107
2021
£’000
453
1,229
1,278
1,282
2,503
1,028
630
2,492
3,077
–
–
13,973
The individual impairment assessments for the cash generating units were based on value-in-use
calculations covering a five-year forecast followed by an extrapolation of expected cash flows to
perpetuity using a long-term growth rate of 2%.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 76/77
10
Intangible Assets (continued)
Right-of-Use Leased Assets
12
A risk-adjusted, pre-tax discount rate of 13.6% (2021: 13.7%) which was judged to be appropriate for
each of the CGUs given that they operate in similar markets and the risk profiles are similar.
Management’s key assumption for all cash generating units and resulting cash flows is to maintain
market share in their markets.
The Directors have concluded that Goodwill is not impaired for any of the cash generating units.
They have further considered the sensitivity of the key assumptions which were most sensitive to
changes, including reduced growth rates and operating margins, and increased discount rates.
The Growth rates are based on economic data for the wider economy and represent a prudent
expectation of growth.
Management has performed a sensitivity analysis for the Monmouth Scientific CGU for which with
the base assumptions there is a 13% headroom of value in use above carrying cost of the CGU, and
for which reasonably possible, but not probable, changes in the key assumptions could give rise to
an impairment.
If any one of the following occurred, the headroom would disappear:
l discount rate increased to from 13.6% to 15.1%
l sales volume reduced by 3.5%, with no action on costs
l operating margins reduced by 1.8%
The average remaining amortisation period of intangible assets excluding Goodwill is 10.1 years
(2021: 7.8 years).
Cost
At 30 April 2021
Additions
Additions on acquisition
FX movement
Disposals
At 30 April 2022
Depreciation
At 30 April 2021
Charge for year
Disposals
At 30 April 2022
Net book value
At 30 April 2022
At 30 April 2021
Motor
vehicles
£’000
Property
£’000
Total
£’000
109
42
–
–
(9)
142
34
48
(9)
73
69
75
3,222
5,550
73
8
(558)
8,295
899
501
(341)
1,059
3,331
5,592
73
8
(567)
8,437
933
549
(350)
1,132
7,236
2,323
7,305
2,398
11
Property, Plant and Equipment
Motor
vehicles
£’000
Computer
equipment
£’000
Tools and
other
equipment
£’000
Furniture
fixtures
& fittings
£’000
Building &
leasehold
improvement
£’000
Cost
At 30 April 2021
Additions
Additions on acquisition
FX movement
Disposals
At 30 April 2022
Depreciation
At 30 April 2021
Charge for year
Disposals
At 30 April 2022
Net book value
At 30 April 2022
At 30 April 2021
394
70
168
–
(66)
566
31
105
(44)
92
474
363
326
63
26
–
(13)
402
145
33
(13)
165
1,521
797
8
10
(300)
2,036
838
338
(205)
971
326
140
69
–
(60)
475
104
123
(57)
170
416
356
1,418
–
(58)
2,132
132
49
(42)
139
Total
£’000
2,983
1,426
1,689
10
(497)
5,611
1,250
648
(361)
1,537
237
181
1,065
683
305
222
1,993
284
4,074
1,733
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 78/79
13
Leases
Lease liabilities are presented in the balance sheet as follows:
Current
Non-current
2022
£’000
780
6,656
7,436
2021
£’000
509
2,050
2,559
The Group has leases for the main factory buildings and offices, and for some vehicles and
equipment. With the exception of short-term leases and leases of low-value underlying assets,
each lease is reflected on the balance sheet as a right-of-use asset and a lease liability. Variable
lease payments which do not depend on an index or a rate are excluded from the initial
measurement of the lease liability and asset. The Group classifies its right-of-use assets in a
consistent manner to its property, plant and equipment (see note 12).
Each lease generally imposes a restriction that, unless there is a contractual right for the Group to
sublet the asset to another party, the right-of-use asset can only be used by the Group. Leases are
either non-cancellable or may only be cancelled by incurring a substantial termination fee. For
leases over office buildings and factory premises the Group must keep those properties in a good
state of repair and return the properties in their original condition at the end of the lease.
Furthermore, the Group must insure items of plant and machinery and incur maintenance fees on
such items in accordance with the lease contracts.
The lease liabilities are secured by the related underlying assets. Total contractual undiscounted
lease liabilities at 30 April 2022 were as follows:
Within one year
Within two to five years
After five years
Total undiscounted lease liabilities
2022
£’000
933
3,027
5,021
8,981
2021
£’000
492
1,182
1,109
2,783
During the previous year, the Group was committed to a long-term lease of the new custom-built
factory building at Monmouth Scientific and the total commitment at that date was £4.6m. The
building was occupied during the current year and the liabilities and assets were recognised in line
with this.
Lease payments not recognised as a liability
The Group has elected not to recognise a lease liability for short term leases (leases with an
expected term of 12 months or less) or for leases of low value assets. Payments made under such
leases are expensed on a straight-line basis. In addition, certain variable lease payments are not
permitted to be recognised as lease liabilities and are expensed as incurred.
Deferred Tax
14
Opening
Capitalised R&D
Deferred tax on share options
Adjustment on enacted tax rate
Acquired deferred tax assets/liabilities
Intangibles recognised on business combinations
Amortisation acquired intangible assets
Foreign exchange
Trading losses recognised
Adjustment to prior year
Other temporary differences
At 30 April 2022
Deferred tax on capitalised R&D
Other temporary differences
Deferred tax on acquired intangible assets
Deferred tax on share option exercises
Trading losses recognised
At 30 April 2022
2022
Deferred
tax asset
£’000
Deferred
tax
liability
£’000
2021
Deferred
tax asset
£’000
Deferred
tax
liability
£’000
1,697
–
(1,260)
508
–
–
–
3
698
16
(76)
1,586
(2,479)
(55)
–
(793)
–
(1,244)
276
–
–
(31)
(91)
(4,417)
246
–
1,249
–
–
–
–
–
–
54
148
1,697
(2,134)
41
–
–
(90)
(544)
217
–
–
37
(6)
(2,479)
2022
Deferred
tax asset
£’000
Deferred
tax
liability
£’000
2021
Deferred
tax asset
£’000
Deferred
tax
liability
£’000
–
183
–
678
725
1,586
(236)
(412)
(3,769)
–
–
(4,417)
–
200
–
1,468
29
1,697
(138)
(203)
(2,138)
–
–
(2,479)
Deferred tax assets are recognised for tax losses available for carrying forward to the extent that the
realisation of the related tax benefit through future taxable profits is probable. The Group did not
recognise deferred tax assets of £260k (2021: £198k) in respect of losses. These losses are all pre-1
April 2017 and therefore cannot be offset against trading profits of the same trade post 1 April 2017.
Total losses (provided and unprovided) totalled £1.3m (2021: £1.5m).
The Group benefits from tax deductions related to actual gains made by employees on exercise of
share options, which are different, in both magnitude and timing, from the share-based payments
expense recorded in the Group’s Income Statement (for which no tax deduction is received).
A deferred tax asset is recorded for the tax deductions expected to result from future share option
exercises, based on the calculated earned gains inherent in share options outstanding at period
end, at the current enacted tax rate. To the extent that the deductible employee gains exceed the
recorded share-based payments, the excess of the associated current or deferred tax is recognised
directly in equity. Tax deductions totalling £357k (2021: £1,438k) have been recognised directly
in equity.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 80/81
15
Inventories
Trade and Other Payables
Raw materials and consumables
Work in progress
Finished goods
2022
£’000
5,000
993
1,280
7,273
2021
£’000
4,086
750
1,223
6,059
Trade payables
Social security and other taxes
Deferred and contingent consideration
Other payables
Accruals and deferred income
There is no material difference between the replacement cost of inventory and the amounts
stated above.
In the year ended 30 April 2022 a total of £17,998k (2021: £12,206k) of inventories were consumed
and charged to the Income Statement as an expense.
16
Trade and Other Receivables
Trade receivables
Corporation tax
Other receivables
Prepayments
2022
£’000
6,213
137
249
945
7,544
2021
£’000
6,182
17
171
373
6,743
All amounts are short-term. All of the receivables have been reviewed for potential credit losses
and Expected Credit Loss has been estimated.
A reconciliation of the movement in the Expected Credit Loss provision for trade receivables is
as follows:
As at 1 May 2021
Charged in year
As at 30 April 2022
2022
£’000
2021
£’000
195
(38)
156
165
30
195
Accruals and deferred income includes an amount of £5,533k (2021: £3,875k) in respect of
contract liabilities for revenues relating to performance obligations expected to be satisfied within
the next 12 months. The contract liabilities balance has increased during the year principally due
to contract liabilities of acquired subsidiaries. All the prior year contract liabilities of £3,875k were
recognised as revenue during the current year.
At the end of the year, contingent consideration of £961k was outstanding in relation to the
acquisition of Scientific Vacuum Systems Limited, and still remains outstanding. Deferred
consideration of £2,344k was outstanding in relation to the acquisition of Safelab Systems Limited,
which has since been paid to the sellers.
All amounts are short-term. The carrying values are considered to be a reasonable approximation
of fair value.
Provisions
Dilapidations
Warranties
2022
£’000
2021
£’000
2022
£’000
2021
£’000
As at 1 May 2021
(Released)/charged in the year
As at 30 April 2022
110
(22)
88
–
110
110
120
(45)
75
18
19
2022
£’000
3,391
998
3,405
481
7,814
16,089
2021
£’000
3,347
751
2,350
705
5,673
12,826
85
35
120
2021
£’000
85
145
230
Total
2022
£’000
230
(67)
163
In addition, some of the unimpaired trade receivables are past due at the reporting date. There are
no indications that financial assets past due but not impaired are irrecoverable.
The Directors consider that the carrying amount of trade and other receivables approximates to
their fair value.
As at 1 May 2021
(Released)/charged in the year (net)
As at 30 April 2022
17
Cash and Cash Equivalents
Cash at bank and in hand
2022
£’000
2021
£’000
5,106
3,836
Warranties of between one and three years are given with the sales of products. There are potential
costs associated with the repair of goods under these warranties which could occur at any time
over the next three years of which the level of costs is uncertain. The warranty provision is based
on the historical cost of warranty repairs over the last three years, and it is expected that the
majority of this expenditure will be incurred in the next financial year. During the year the Group
acquired Scientific Vacuum Systems Limited and as part of these acquisition, dilapidations of £30k
have been provided for.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 82/83
20
Borrowings
Borrowings are repayable as follows:
Share Capital
Within one year
Bank finance
Finance lease liabilities
After one and within five years
Bank finance
Finance lease liabilities
Total borrowings
2022
£’000
2021
£’000
–
779
779
4,000
6,656
10,656
11,435
1,371
509
1,880
1,714
2,050
3,764
5,644
Bank finance relates to amounts drawn down under the Group’s bank facility with HSBC Bank plc,
which is secured against all assets of the Group. Until 01 November 2021, the facility consisted of
a revolving facility of £5.0m and an amortising facility which reduced in quarterly instalments from
£4.8m when it was taken out in November 2019 to zero by November 2024, when the agreement
was due to expire. On 01 November 2021 the Group renewed and expanded its committed loan
facility with HSBC to £20m, with a further accordion option of an additional £10m (at the discretion
of HSBC), and with repayment date of November 2024 extendable for two further years. The
revolving facility is available for general use. The facility has covenants relating to leverage (net debt
to EBITDA) and interest coverage.
21
Reconciliation of Liabilities Arising from Financing Activities
The changes in the Group’s liabilities arising from financing activities can be classified as follows:
At 30 April 2021
Movements:
– New loans
– Repayments
– Assumed on acquisition
At 30 April 2022
Long-term
borrowing
£’000
Short-term
borrowing
£’000
Leases
£’000
Total
£’000
1,714
1,371
2,559
5,644
9,000
(6,714)
–
4,000
–
(1,371)
–
–
4,836
(35)
75
7,435
13,836
(8,120)
75
11,435
22
23
Authorised
1,000,000,000 (2021: 1,000,000,000) Ordinary shares of 1p each
Allotted, called up and fully paid 102,199,676
(2021: 98,408,164) Ordinary shares of 1p each
2022
£’000
2021
£’000
10,000
10,000
1,022
984
During the year 3,673,796 Ordinary shares of 1p were issued due to the exercise of options and
117,716 Ordinary shares of 1p were issued to part fund the acquisition made during the year.
The 3,673,796 options had an exercise price ranging from £0.010 to £1.740. The Group received
£651k cash for the option exercises as well as offsetting £200k against the acquisition of Safelab
Systems Limited. The £851k consideration received was allocated £38k to share capital and £813k
to share premium.
Earnings Per Share
The calculation of the basic earnings per share is based on the profits attributable to the
shareholders of SDI Group plc divided by the weighted average number of shares in issue during
the period. All profit per share calculations relate to continuing operations of the Group.
Basic earnings per share:
– Year ended 30 April 2022
– Year ended 30 April 2021
Dilutive effect of share options:
– Year ended 30 April 2022
– Year ended 30 April 2021
Diluted earnings per share:
– Year ended 30 April 2022
– Year ended 30 April 2021
Profit
attributable to
shareholders
£’000
Weighted
average
number of
shares
Earnings
per share
amount in
pence
7,543 100,122,394
97,852,313
4,708
7.53
4.81
4,136,692
4,946,771
7,543 104,259,085
4,708 102,799,084
7.23
4.58
At the year end, there were 791,000 (2021: nil) share options which were anti-dilutive but may be
dilutive in the future.
Contingent Liabilities
24
Performance guarantees totalling £32k (2021: £32k) are held by the bank. These would become
payable by the Group if, once the customer has placed an order, the Group fails to deliver goods to
the customer.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 84/85
25
Related Party Transactions and Controlling Related Party
Transactions with directors are disclosed within the Directors’ Remuneration Report and note 7.
The Company is not required to disclose transactions with its wholly owned subsidiaries.
Unless otherwise stated, none of the transactions incorporated in these financial statements
include any special terms or conditions. There is no ultimate controlling party.
26
Financial Risk Management Objectives and Policies
Financial instruments
The Group uses various financial instruments, including loans and leasing arrangements, and has
certain assets and liabilities which are denominated in foreign currencies. The main purpose of the
financial instruments is to raise finance for the Group’s operations. The existence of these financial
instruments and other financial assets and liabilities exposes the Group to a number of financial
risks, primarily interest rate risk and currency risk.
Interest rate risk
The Group finances its operations through a mixture of retained profits, short-term and long-term
bank borrowings, and shareholders’ equity. The Group has an exposure to interest rate fluctuations
on its borrowings which are generally linked to SONIA. An increase in SONIA of 1% would result in
an increase in interest costs of approximately £40k (2021: £31k) annually, based on the loan
outstanding at 30 April 2022.
Currency risk
A significant proportion of the Group’s monetary assets (principally bank balances and trade
receivables) and liabilities (principally borrowings) are denoted in Dollars and Euros but held in
entities with Sterling as the functional currency. An adverse movement in exchange rates could
lead to losses on these positions. As at 30 April 2022 an adverse movement in the dollar of 5%
would result in a reduction in the Group’s equity and profit or loss of £49k (2021: £62k). An adverse
movement in the Euro of 5% would result in a reduction in the Group’s equity and profit or loss of
£115k (2021: £64k).
The carrying amount of the Group’s Dollar and Euro-denominated monetary assets with a differing
functional currency at the reporting date is as follows:
US Dollars
Euros
Assets
2022
£’000
1,035
2,416
2021
£’000
1,303
1,354
In addition to this, significant proportions of the Group’s revenue, purchases and overhead costs
are transacted in foreign currencies, mainly Dollars and Euros. The Group does not attempt to
hedge its exposure using derivative instruments.
Credit risk
The Group’s exposure to credit risk is limited to the carrying amount of cash deposits and trade
and other receivables recognised at the balance sheet date of £12,669k (2021: £10,757k). Risks
associated with cash deposits are limited as the banks used are reputable with quality external
credit ratings.
The principal credit risks lie with trade receivables. In order to manage credit risk credit limits are
set for customers based on a combination of payment history and third-party credit references.
Details of overdue trade receivables are provided below. All of the receivables have been reviewed
for potential credit losses, and expected credit loss has been estimated, as set out in note 16.
The simplified approach has been adopted to calculate the level of expected credit loss provision
in the year with a 30% allowance applied to those debtors due between 90 days and 120 days and
a 70% allowance applied to those debtors greater than 120 days old.
Liquidity risk
Liquidity risk is that the Group might be unable to meet its obligations and arises from trade and
other payables. The Group manages liquidity risk by maintaining adequate reserves and banking
facilities and by continuously monitoring forecasts and actual cash flows.
The Group’s financial liabilities have contractual maturities as summarised below:
As at 30 April 2022:
Trade and other payables
Borrowings
As at 30 April 2021:
Trade and other payables
Borrowings
Ageing of receivables:
Past due less than 1 month
Past due 1-3 months
Past due 3-6 months
Past due 6-12 months
Past due greater than 12 months
Current
Non-current
Within
6 months
£’000
16,089
448
Between
6 and 12
months
£’000
Between
1 and 5
years
£’000
Later than
5 years
£’000
–
354
–
10,975
–
–
Current
Non-current
Within
6 months
£’000
12,826
1,192
Between
6 and 12
months
£’000
Between
1 and 5
years
£’000
Later than
5 years
£’000
–
988
–
4,364
–
–
2022
2021
Gross
£’000
Provision
£’000
Gross
£’000
Provision
£’000
3,781
2,439
295
21
–
6,536
–
(10)
(298)
(15)
–
(323)
3,698
1,873
757
75
1
6,404
–
(2)
(186)
(33)
(1)
(222)
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 86/87
27
Summary of Financial Assets and Liabilities by IFRS 9 Category
Business Combinations
29
The carrying amounts of the Group’s financial assets and liabilities as recognised at the balance
sheet date of the years under review may also be categorised as follows;
Financial
assets at
amortised
cost
2022
£’000
Non-
financial
assets
2022
£’000
Financial
liabilities at
amortised
cost
2022
£’000
Financial
liabilities
measured
at fair value
through
profit
and loss
2022
£’000
5,106
6,599
–
–
–
945
–
–
–
–
(779)
(10,656)
–
–
–
–
Non-
financial
liabilities
2022
£’000
–
–
–
–
Total
balance
sheet
heading
2022
£’000
5,106
7,544
(779)
(10,656)
–
–
(14,130)
11,705
945
(25,565)
(961)
(961)
(998)
(16,089)
(998)
(14,874)
Balance sheet headings
Cash and cash equivalents
Trade and other receivables
Borrowings – current
Borrowings – noncurrent
Trade and other payables –
current
Total
Financial
assets at
amortised
cost
2021
£’000
Non-
financial
assets
2021
£’000
Financial
liabilities at
amortised
cost
2021
£’000
Financial
liabilities
measured
at fair value
through
profit and
loss
2021
£’000
Non-
financial
liabilities
2021
£’000
–
–
–
–
Total
balance
sheet
heading
2021
£’000
3,836
6,743
(1,880)
(3,764)
–
–
(1,880)
(3,764)
–
–
–
–
(9,725)
(15,369)
(2,350)
(2,350)
(751)
(751)
(12,826)
7,891
Balance sheet headings
Cash and cash equivalents
Trade and other receivables
Borrowings – current
Borrowings – noncurrent
Trade and other payables –
current
Total
3,836
6,370
–
–
–
10,206
–
373
–
–
–
373
The fair values of the financial assets and liabilities at 30 April 2022 and 30 April 2021 are not
materially different from their book values.
28
Capital Management Policies and Procedures
The Group’s capital management objectives are:
l to ensure the Group’s ability to continue as a going concern; and
l to provide an adequate return to shareholders; and
l to be in a position to make acquisitions (‘buy and build’ strategy)
The Group monitors capital by tracking and forecasting its Debt-to-EBITDA ratio as required by its
bank facility covenant. The Group has historically acquired companies using a combination of cash
on hand, increased borrowing, issue of shares to the sellers, and new equity share placings, taking
care to retain adequate liquidity reserves.
The Group has not paid dividends but will keep its dividend policy under review.
On 5 January 2022, the Company acquired 100% of the share capital of Scientific Vacuum Systems
Limited, a company incorporated in England and Wales, for a consideration payable in cash,
including an earnout element dependent on financial performance to September 2022.
The assets and liabilities acquired were as follows:
Book value
£’000
Fair value
adjustment
£’000
Fair value
£’000
Assets
Non-current assets
Intangible assets
Property, plant & equipment
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Liabilities
Trade and other payables
Borrowings – lease commitments
Corporation tax
Deferred tax liability
Provisions for warranty and dilapidations
Net assets acquired
Goodwill
Consideration and cost of investment
Fair value of consideration transferred
Cash paid in year
Estimate of Earnout payment
–
38
38
270
549
1,249
(584)
(4)
(140)
–
(9)
1,369
2,228
–
2,228
(27)
–
–
64
–
–
(557)
(21)
1,687
2,228
38
2,266
243
549
1,249
(520)
(4)
(140)
(557)
(30)
3,056
2,444
5,500
5,539
961
5,500
Scientific Vacuum Systems Limited contributed £1,174k revenue and approximately £363k to the
Group’s profit before tax for the period between the date of acquisition and the balance sheet date,
not including £133k of acquired intangible asset amortisation.
If the acquisition of Scientific Vacuum Systems Limited had been completed on the first day of the
financial year, the additional impact on group revenues for the period would have been £1,499k
and the additional impact on group profit would have been approximately £437k, before additional
£267k of amortisation expense.
The goodwill of £2,444k arising from the acquisition relates to the assembled workforce and to
expected future profitability, synergy and growth expectations.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Consolidated Financial Statements (continued)
Financial Statements 88/89
Safelab Systems Limited contributed £522k revenue and approximately £98k to the Group’s profit
before tax for the period between the date of acquisition and the balance sheet date, not including
£68k of acquired intangible asset amortisation.
If the acquisition of Safelab Systems Limited had been completed on the first day of the financial
year, the additional impact on group revenues for the period would have been £4,730k and the
additional impact on group profit would have been approximately £713k, before additional £342k
of amortisation expense.
The goodwill of £3,561k arising from the acquisition relates to the assembled workforce and to
expected future profitability, synergy and growth expectations.
Management performed a detailed review of the acquired intangible assets, and recognised
acquired customer relationships, tradename and order book. The customer relationships intangible
asset was valued using a multi-period excess earnings methodology. The estimated fair value of
the customer relationships therefore reflects the present value of the projected stream of cash
flows that are expected to be generated by existing customers going forwards, net of orders on
hand at the date of acquisition. Key assumptions are the discount rate and attrition rate. Values of
14.8% and 20% were selected.
A total of 117,716 shares were issued for consideration for £200k.
The deferred tax liability has been calculated on the amortisable intangible assets using the current
enacted statutory tax rate of 25%.
The last financial year for Safelab Systems Limited before the acquisition closed was to 28 February
2022. The current financial year has been extended by two months to April 2023 to align with that
of SDI Group plc.
29
Business Combinations (continued)
A third party performed a detailed review of the acquired intangible assets and recognised acquired
customer relationships and order book. The customer relationships intangible asset was valued
using a multi-period excess earnings methodology. The estimated fair value of the customer
relationships therefore reflects the present value of the projected stream of cash flows that are
expected to be generated by existing customers going forwards, net of orders on hand at the date
of acquisition. Key assumptions are the discount rate and attrition rate. Values of 16.7% and 10%
were selected.
The deferred tax liability has been calculated on the amortisable intangible assets using the current
enacted statutory tax rate of 25%.
The last financial year for Scientific Vacuum Systems Limited before the acquisition closed was to
30 September 2021. The current financial year has been shortened by five months to April 2022 to
align with that of SDI Group plc.
On 24 March 2022, the Company acquired 100% of the share capital of Safelab Systems Limited,
a company incorporated in England and Wales, for a consideration payable in cash and shares.
The assets and liabilities acquired were as follows:
Book value
£’000
Fair value
adjustment
£’000
Fair value
£’000
Assets
Non-current assets
Intangible assets
Property, plant & equipment
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Liabilities
Trade and other payables
Borrowings – lease commitments
Corporation tax
Deferred tax liability
Net assets acquired
Goodwill
Consideration and cost of investment
Fair value of consideration transferred
Cash paid in year
Deferred consideration
SDI Group shares issued to sellers
–
1,593
1,593
599
784
758
(585)
–
(128)
(34)
2,987
2,612
72
2,684
–
–
–
–
(72)
–
(653)
1,959
2,612
1,665
4,277
599
784
758
(585)
(72)
(128)
(687)
4,946
3,561
8,507
5,920
2,387
200
8,507
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Company Balance Sheet
as at 30 April 2022
Company Statement of Changes in Equity
as at 30 April 2022
90/91
Fixed assets
Property, plant & equipment
Investments
Intangible assets
Deferred tax asset
Current assets
Debtors
Cash
Creditors: amounts falling due within one year
Net current liabilities
Total assets less current liabilities
Note
2022
£’000
2021
£’000
4
5
6
7
8
3
36,651
–
1,106
37,760
7
27,476
–
1,241
28,724
4,613
2,431
7,044
4,315
3,184
7,499
(9,934)
(12,507)
(2,890)
(5,008)
34,870
23,716
Creditors: amounts falling due after more than one year
9 &10
(4,001)
(1,716)
Net assets
Capital and reserves
Called up share capital
Share premium account
Share-based payment reserve
Merger relief reserve
Profit and loss account
Shareholders’ funds
11
30,869
22,000
1,022
9,905
523
424
18,995
30,869
984
9,092
714
424
10,786
22,000
The parent company has taken advantage of section 408 of the Companies Act 2006 and has not included its own
profit and loss account in these financial statements. The parent company’s profit for the financial year was £7,443k
(2021: £3,597k).
The financial statements were approved and authorised for issue by the Board of Directors on 21 July 2022.
Mike Creedon
Chief Executive Officer
Jon Abell
Chief Financial Officer
Company registration number: 06385396
As at 1 May 2021
Shares issued
Share-based payment transfer
Share-based payments
Transactions with owners
Tax in respect to share options
Profit for the year
Total comprehensive income
At 30 April 2022
As at 1 May 2020
Shares issued
Share-based payment transfer
Share-based payments
Transactions with owners
Tax in respect to share options
Profit for the year
Total comprehensive income
At 30 April 2021
Merger
reserve
relief
£’000
Share
premium
reserve
£’000
Share-
based
payment
reserve
£’000
424
–
–
–
–
–
–
–
424
9,092
813
–
–
813
–
–
–
9,905
714
–
(504)
313
(191)
–
–
–
523
Share
capital
£’000
984
38
–
–
38
–
–
–
1,022
Share
capital
£’000
Merger
reserve
relief
£’000
Share
premium
reserve
£’000
Share-
based
payment
reserve
£’000
975
9
–
–
9
–
–
–
984
424
–
–
–
–
–
–
–
424
8,748
344
–
–
344
–
–
–
9,092
467
–
(58)
305
247
–
–
–
714
Profit
and loss
account
£’000
10,786
–
504
–
504
262
7,443
7,705
18,995
Profit
and loss
account
£’000
6,109
–
58
–
58
1,022
3,597
4,619
10,786
Total
£’000
22,000
851
–
313
1,164
262
7,443
7,705
30,869
Total
£’000
16,723
353
–
305
658
1,022
3,597
4,619
22,000
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Company Financial Statements
for the year ended 30 April 2022
1
Principal Accounting Policies
Basis of preparation
The separate financial statements were prepared in accordance with Financial Reporting Standard
101 Reduced Disclosure Framework. The financial statements are prepared under the historical
cost convention.
Disclosure exemptions adopted
In preparing these financial statements the Company has taken advantage of all disclosure
exemptions conferred by FRS 101. Therefore, these financial statements do not include:
l A statement of cash flows and related notes
l The requirements of IAS 24 related party disclosures to disclose related party transactions entered
between two or more members of the group as they are wholly owned within the group.
l Disclosure of key management personnel compensation
l Capital management disclosures
l Presentation of comparative reconciliation of the number of shares outstanding at the beginning
and at the end of the period
l The effect of future accounting standards not adopted
l Certain share-based payment disclosures
l Disclosures in relation to impairment of assets
l Financial instrument disclosures under IFRS 9
Investments
SDI Group plc qualifies for merger relief under Companies Act 2006 s612 and has recorded the
investment in Synoptics Limited at the nominal value of the shares issued, less provision for
impairment. The shares issued on acquisition of Opus Instruments Limited also qualified for merger
relief under Companies Act 2006 s612 and so the premium has been classified as a merger relief
reserve. All other investments are recorded at cost, less any provision for impairment.
Other intangible assets
Intangible assets acquired as part of an acquisition of a business are capitalised separately from
goodwill providing the assets are separable or they arise from contractual or other legal rights and
their fair value can be measured reliably. The fair value of intangible assets in a business
combination includes the value of any tax benefit.
Share options
SDI Group plc regularly issues share options to employees, including to employees of subsidiary
companies. The fair value of the employee services received in exchange for the grant of options is
recognised as an expense which is written off to the income statement over the vesting period of
the option. The amount to be expensed is determined by reference to the fair value of the options
at the grant date adjusted for the number expected to vest. The expense relating to these options is
recognised in the relevant subsidiary company income statement. The carrying value of the
investment in those subsidiaries is increased by an amount equal to the value of share-based
payment charge attributable to the option holders in the respective subsidiaries.
Taxation
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in
the financial statements and the corresponding tax bases used in the computation of taxable profit
It is accounted for using the balance sheet liability method. However, deferred tax is not provided
on the initial recognition of goodwill, or on the initial recognition of an asset or liability unless the
related transaction is a business combination or affects tax or accounting profit.
Financial Statements 92/93
Deferred tax on temporary differences associated with investments in subsidiaries is not provided
if reversal of these temporary differences can be controlled by the Group or it is probable that
reversal will not occur in the foreseeable future. Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which the temporary difference can be utilised.
The carrying value of deferred tax asset is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow part or all
of the assets to be recovered.
Deferred tax is calculated using tax rates that are enacted or substantively enacted at the balance
sheet date. Deferred tax is charged or credited to the income statement, except when it relates to
items charged or credited directly to equity, in which case the deferred tax is also dealt with in
equity. Deferred tax relating to items recognised in other comprehensive income is recognised in
other comprehensive income.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.
Financial instruments
Financial liabilities and equity instruments are classified according to the substance of the
contractual arrangements entered into. An equity instrument is any contract that results in a residual
interest in the assets of the Company after deducting all of its financial liabilities. Equity instruments
do not include a contractual obligation to deliver cash or other financial asset to another entity.
Any instrument that does have the obligation to deliver cash or another financial asset to another
entity is classified as a financial liability. Financial liabilities are presented under creditors on the
balance sheet.
Pension
The pension costs charged against profits represent the amount of the contribution’s payable to
the defined contribution scheme in respect of the accounting period.
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost. Any difference between the proceeds and the redemption
value is recognised in the income statement over the period of the borrowings using the effective
interest method. Borrowings are classified as current liabilities unless the Group has an
unconditional right to defer settlement of the liabilities for at least 12 months after the balance
sheet date.
Equity
Equity comprises the following:
l “Share capital” represents the nominal value of equity shares
l “Merger relief reserve” represents the difference between the parent company’s cost of
investment and the subsidiary’s share capital and share premium where a group reorganisation
qualifies as a common control transaction.
l “Share premium account” represents the excess over nominal value of the fair value of
consideration received for equity shares, net of expenses of the share issue.
l “Share-based payment reserve” represents equity-settled share-based employee remuneration
until such share options are exercised. The equity component of convertible loan stock, if any, is
also included. On conversion of the loan stock the equity component is transferred into the
retained earnings reserve.
l “Retained earnings” represents retained profits.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Company Financial Statements (continued)
Financial Statements 94/95
2
Employee Remuneration
Remuneration in respect of directors paid by the Company was as follows:
Emoluments
Pension
2022
£’000
729
16
745
2021
£’000
654
14
668
During the year, 5 directors exercised options over the Ordinary shares of the Company realising a
gain on exercise of £4,343k (2021: £nil).
Details of directors’ interest in the shares and options of the Company are provided in the directors’
remuneration report on pages 34-35. The highest paid director aggregate entitlements were £338k
(2021: £283k) which includes the gain on share options exercised, in addition to Company pension
contributions of £9k (2021: £8k) made to a money purchase scheme. As at 30 April 2022 the
highest paid Director held a total of 712,974 share options (2021: 1,952,327 share options).
Key management for the Company is considered to be the directors of the Company. Employer’s
National Insurance in respect of directors was £366k (2021: £61k) which has increased this year
due to the exercise of share options.
Share-based employee remuneration
Further details of the Company’s share-based remuneration are set out in note 7 to the
consolidated financial statements. The share-based payment expense for the Company totalled
£191k (2021: £202k).
3
Auditor’s Remuneration
Auditor’s remuneration attributable to the Company is as follows:
Fees payable to the company’s auditor for the audit of the
financial statements
4
Investments
Investments in Group undertakings
Cost and net book amount as at 1 May 2021
Additions
Share-based payment expense recognised as capital contributions in subsidiaries
Cost and net book amount as at 30 April 2022
2022
£’000
2021
£’000
30
20
£’000
27,476
9,059
116
36,651
Details of the investments are as follows:
Subsidiary undertakings
Synoptics Limited
Atik Cameras Limited
Atik Cameras
Unipessoal Lda
Opus Instruments Limited
Sentek Limited
Astles Control Systems Limited
Applied Thermal Control Limited
Fistreem International Limited
Thermal Exchange Limited
Graticules Optics Limited
MPB Industries Limited
Chell Instruments Limited
Monmouth Scientific Limited
Ducthub Limited
Labhub Limited
Scientific Vacuum Systems Limited
Safelab Systems Limited
Country of
Incorporation
England
& Wales
England
& Wales
Portugal
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
England
& Wales
Holdings
Ordinary
shares
Ordinary
shares
Share
quotas
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
Ordinary
shares
% of voting
rights
100%
100%
Nature of
Business
Design &
Manufacture
Design
100%
Manufacture
100%
Dormant
100%
100%
100%
100%
Design &
Manufacture
Design &
Manufacture
Design &
Manufacture
Design &
Manufacture
100%
Dormant
100%
100%
100%
100%
Design &
Manufacture
Design &
Manufacture
Design &
Manufacture
Design &
Manufacture
100%
Dormant
100%
Dormant
100%
100%
Design &
Manufacture
Design &
Manufacture
The following companies are all held by Synoptics Limited:
Scientific Digital Imaging Limited
England
& Wales
Ordinary
shares
100%
Dormant
Synoptics Inc
USA
Ordinary
100%
Distributor
The following company is held by Monmouth Scientific Limited:
Uniform Engineering Limited
England
& Wales
Ordinary
shares
100%
Design &
Manufacture
Each of the above investments has been included in the consolidated financial statements.
A parental guarantee has been granted to Fistreem International Limited, company number 05136733,
in accordance with the Companies Act 2006 s479c, relating to the audit of its individual accounts.
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Company Financial Statements (continued)
Financial Statements 96/97
5
Intangible Assets
Debtors
Cost at 30 April 2022 & 2021
Amortisation at 30 April 2022 & 2021
Net book value as at 30 April 2021
Net book value as at 30 April 2022
6
Deferred Tax Asset
Opening
Deferred tax on share options
Adjustment on enacted tax rate
Trading losses recognised
Adjustment to prior year
Other temporary differences
At 30 April 2022
Other temporary differences
Trading losses
Deferred tax on share option exercises
At 30 April 2022
2021
£’000
50
50
–
–
2022
Deferred
tax asset
£’000
2021
Deferred
tax asset
£’000
1,241
(1,077)
373
657
19
(107)
1,106
164
964
–
–
–
113
1,241
2022
Deferred
tax asset
£’000
2021
Deferred
tax asset
£’000
42
657
407
1,106
113
–
1,128
1,241
Deferred tax assets are recognised for tax losses available for carrying forward to the extent that the
realisation of the related tax benefit through future taxable profits is probable. The Group did not
recognise deferred tax assets of £260k (2021: £198k) in respect of losses. Total losses (provided and
unprovided) totalled £1.3m (2021: £1.5m). These losses are all pre-1 April 2017 and therefore
cannot be offset against trading profits of the same trade post 1 April 2017.
The deferred tax asset relates to tax deductions for share options as they are exercised.
Amounts owed by group undertakings
Prepayments and accrued income
Other debtors
2022
£’000
4,421
164
28
4,613
2021
£’000
4,210
97
8
4,315
All debtors fall due within one year of the balance sheet date. No provisions are made for inter-group debtors as the
credit risk is not thought to be significant.
Creditors: Amounts Falling Due Within One Year
Bank loans
Amounts owed to group undertakings
Trade creditors
Finance lease liabilities
Social security and other taxes
Other creditors
Accruals and deferred income
Creditors: Amounts Falling Due After One Year
Bank loans
Finance lease liabilities
2022
£’000
–
9,117
160
2
24
–
631
9,934
2022
£’000
4,000
1
4,001
2021
£’000
1,371
7,746
31
7
16
2,928
408
12,507
2021
£’000
1,714
2
1,716
7
8
9
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Notes to the Company Financial Statements (continued)
Seven-Year Summary
98/99
10
Borrowings
Within one year
Bank loans
Finance lease liabilities
After one and within five years
Bank loans
Finance lease liabilities
Total borrowings
2022
£’000
2021
£’000
–
2
2
4,000
1
4,001
4,003
1,371
7
1,378
1,714
2
1,716
3,094
Bank finance relates to amounts drawn down under the Group’s bank facility with HSBC Bank plc,
which is secured against all assets of the Group. Until 01 November 2021, the facility consisted of a
revolving facility of £5.0m and an amortising facility which reduced in quarterly instalments from
£4.8m when it was taken out in November 2019 to zero by November 2024, when the agreement
was due to expire. On 01 November 2021 the Group renewed and expanded its committed loan
facility with HSBC to £20m, with a further accordion option of an additional £10m (at the discretion
of HSBC), and with repayment date of November 2024 extendable for two further years. The
revolving facility is available for general use. The facility has covenants relating to leverage (net debt
to EBITDA) and interest coverage.
Revenue
Cost of sales
Gross profit
2022
£’000
2021
£’000
2020
£’000
2019
£’000
2018
£’000
2017
£’000
49,656
(17,998)
31,658
35,076
(12,206)
22,870
24,498
(7,899)
16,599
17,427
(5,902)
11,525
14,496
(4,954)
9,542
10,748
(3,837)
6,911
2016
£’000
8,473
(3,298)
5,175
Gross margin %
63.8%
65.2%
67.8%
66.1%
65.8%
64.3%
61.1%
Other income
All other operating costs
Adjusted Operating Profit
55
(19,640)
12,073
21
(15,191)
7,700
19
(12,016)
4,602
–
(8,423)
3,102
Reorganisation costs
Share-based payments
Acquisition costs
Amortisation of acquired intangible assets
Operating profit
(125)
(313)
(341)
(1,115)
10,179
(132)
(305)
(179)
(1,153)
5,931
(110)
(276)
(58)
(647)
3,511
(124)
(136)
(288)
(356)
2,198
–
(7,196)
2,346
(63)
(65)
(165)
(277)
1,776
–
(5,575)
1,336
–
(4,356)
819
(87)
(2)
(165)
(118)
964
(17)
(7)
(178)
(81)
536
Net financing expenses
(295)
(287)
(254)
(77)
(63)
(61)
(40)
Profit before tax
9,884
5,644
3,257
2,121
1,713
903
496
11
Called Up Share Capital
Profit for the year
7,543
4,708
2,591
1,912
1,616
828
Income tax
(2,341)
(936)
(666)
(209)
(98)
(75)
75
571
Authorised
1,000,000,000 Ordinary shares (2020: 1,000,000,000) of 1p each
Allotted, called up and fully paid 102,199,676
(2021: 98,408,164) Ordinary shares of 1p each
2022
£’000
2021
£’000
10,000
10,000
1,022
984
During the year 3,791,512 Ordinary shares of 1p were issued due to the exercise of options and
117,716 Ordinary shares of 1p were issued to part fund the acquisition made during the year. The
3,673,796 options had an exercise price ranging from £0.110 to £1.699. The Group received £651k
cash as well as offsetting £200k against the acquisition of Safelab Systems Limited. The £851k
consideration received was allocated £38k to share capital and £813k to share premium.
Share options
A summary of options outstanding currently is provided in note 7 to the consolidated financial
statements.
12
Related Party Transactions
Transactions with directors are disclosed within the Directors’ Remuneration Report and note 7 to
the consolidated financial statements. The Company is not required to disclose transactions with
its wholly owned subsidiaries.
Cash generated from operations
14,689
11,710
5,169
3,620
2,854
1,406
1,298
Earnings per share
Basic earnings per share
Diluted earnings per share
Adjusted diluted earnings per share
7.53p
7.23p
8.71p
4,81p
4.58p
5.97p
2.66p
2.56p
3.43p
2.10p
2.05p
2.83p
1.81p
1.79p
2.30p
1.17p
1.14p
1.55p
1.17p
1.15p
1.61p
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
Shareholder Information
SDI Group plc
Company registration number 6385396
Registered office
Beacon House, Nuffield Road, Cambridge CB4 1TF
Directors
E K Ford Chairman
M J Creedon Chief Executive Officer
J P Abell Chief Financial Officer
I Napper Non-Executive Director
D F Tilston Non-Executive Director
Company Secretary
J P Abell
Bankers
HSBC Bank Plc
50-60 Station Road, Cambridge CB1 2JH
Solicitors
Birketts LLP
22 Station Rd, Cambridge CB1 2JD
Auditor
Grant Thornton UK LLP
Registered Auditor, Chartered Accountants
101 Cambridge Science Park, Milton Road, Cambridge CB4 0FY
Tax Advisors
RSM
Second floor, North Wing East, City House, 126-130 Hills Road, Cambridge CB2 1RE
Nominated Advisor and Broker
finnCap Limited
One Bartholomew Close, London EC1A 7BL
Registrar
Share Registrars Limited
3 The Millennium Centre, Crosby Way, Farnham, Surrey GU9 7XX
SDI Group plc Annual Report 2022
SDI Group plc Annual Report 2022
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SDI Group plc
Beacon House
Nuffield Road
Cambridge CB4 1TF
T +44 (0)1223 727144
F +44 (0)1223 727101
E info@sdigroup.com
www.sdigroup.com