SDI Group (LSE:SDI) — Final results for the year ended 30 April 2026

0:01 Good afternoon, and welcome to the SDI GROUP PLC final results investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. Before we begin, I would like to submit the following poll. And I would now like to hand you over to CEO, Stephen Brown. Good afternoon. Good afternoon, and a warm welcome to today's final results for the year ended 04/30/2026.

0:33 I'm Stephen Brown, CEO of SDI GROUP, and joining me is our CFO, Hami Sharma and Group Head of Corporate Development, James Midriou. Today, we'll walk you through our group summary, provide an operational overview, present the financial results for FY '26, and discuss the outlook for next year. At the end, we will answer any questions you may have. First, let me introduce you to the SDI GROUP. We are a buy and build group with, at the year end, 18 established businesses with over five fifty employees operating from 19 locations worldwide. We operate a decentralized model that fosters autonomy, independence and agility, with our focus being on high growth scientific niche markets.

1:27 We have a proven strategy of combining organic growth with earnings enhancing acquisitions, having made 21 since 2014. In FY 'twenty six, we achieved a total group revenue of circa GBP 75,000,000, and this came from growth from both three of our divisions. This is, in fact, the highest level in SDI's history. Also, with our operations being geographically diverse, we export more than 70% of our highly specialized products to international markets.

2:02 Our buy and build model relies on a compounding cycle of growth. This cycle focuses on two key pillars, organic and inorganic growth. Organic growth strategies include driving operational excellence and promoting synergies to foster group culture. Our model works as cash flow generated from organic activities feeds inorganic growth where we seek to acquire complementary, profitable business in these markets. And this all feeds back to create a compounding effect.

2:40 I'll provide a bit more detail on what we delivered during the year. This financial year has been one of real momentum for the SDI GROUP, moving beyond simply proving our resilience to actively delivering growth. This year demonstrates the success of our unwavering focus of the strategy we've deployed previously. We delivered solid financial performance with circa 13% increase in group revenues, driven by robust demand and an 8% increase in second half organic growth. We are proud to report that we expanded our group level management team and intend to strengthen our capacity for portfolio management and supporting our growth strategy.

3:29 Our growth was further driven by two acquisitions that perfectly align with our strict criteria. We are proud to welcome Seventh Thermal Solutions and PRP optoelectronics. I would now like to provide a bit more color on some of our key organic growth initiatives undertaken during the year. We focused on extracting tangible value from our group network, identifying opportunities to improve efficiencies and market access as well as potential cross selling opportunities across the portfolio. We invested in modern ERP systems at Fraser, LTE and PIC to build a more resilient and scalable infrastructure. We're seeing great cross divisional collaboration, such as MoMA Scientific partnering with Fraser Antistatic to develop a market leading product, leveraging individual products from each business.

4:26 We also saw a second appearance as a collective at the Lab Innovations Expo, bringing five of our businesses together under a single banner to showcase an integrated product offering at The UK's leading industry event. Also, to foster internal talent, we've invested strategically in our people, sponsoring five colleagues into level six CMI senior management apprenticeships, ultimately lead to top tier recognized qualifications. This strong initiative will continue to grow into FY '27 and beyond and will include a cross section of levels. We do this as part of our goal of continually building a robust and sustainable business.

5:14 I would now like to give an operational overview of the business at divisional level. First of all, it's worth reiterating that all three of our divisions delivered growth in FY 2026. Our Industrial and Scientific Sensors segment delivered excellent revenue growth of 23% to GBP 21,000,000. Depending on a few businesses within the segment, Child Instruments enjoyed a phenomenal year, expanding in Formula One to supply 10 of the 11 teams and securing aerospace contracts for Tempest and Halo Space. Centech successfully secured a multimillion contract with the with their multinational health care clients for custom electrochemical blood gas sensors, and Peak Sensors had a phenomenal year driven by thermocouple projects in the glass industry.

6:08 As per usual, we have continued product development across the group. One example of new products launched in the period is MPB's new long series 1,200 flow meter, which is designed for gas and liquid measurement, typically used in laboratory, industrial as well as process control environments. The division was further bolstered by the addition of PRP Optoelectronics, more to follow on PRP.

6:37 Now to our Laboratory Equipment segment, where revenues increased more than 12% to GBP 27,000,000. I'd like to highlight a few of the successes within the division. SAFe Lab secured a major £1,300,000 government contract to supply over 100 Air one XP4 fume covers in the defense industry. Monmouth expanded its capabilities by forming a lucrative exclusive partnership for modular clean rooms. LTE received a bulk order for flexible bespoke drying cabinets for a major client, And several thermal solutions acquired in June 2025 proved their technological capabilities by finishing their pilot program for a new vacuum furnace alongside the UKAEA.

7:27 Among new product launches in this segment was SafeLab's new Air One C700 ductless recirculating fume cabinet designed for industrial labs, universities, research facilities and higher education environments.

7:45 Finally, the Industrial and Scientific Products division seen solid performance across the division with revenues up 6% to £27,000,000. Added cameras performed very strongly, securing a $4,000,000 professional astronomy contract and winning a pivotal integration into a prestigious deep space observation telescope project, the world's largest all lens telescope. Inspect Vision continued to gain traction in North America, completing installations for key multinational companies across the aerospace, ecommerce and industrial manufacturing sectors. I'm receiving the best award 2025 for innovation at the leading industry conference.

8:32 Fraser saw increased activity from South Korea. Scientific vacuum systems demonstrated strong customer stickiness, securing a £2,200,000 contract with a leading global consumer brand and Applied Thermal Control, releasing new portfolio products to address regulatory changes relating to face downs and bans and f gases as well as chillers able to survive in increasingly more common temperature extremes. But now I'd like to hand over to James to provide some more detail on the acquisitions undertaken during the period. Thanks, Steve. Yes. Moving on to our inorganic strategic development. In FY twenty six, we made two earnings enhancing acquisitions, both of which in line with our key criteria.

9:25 Firstly, Seventh Thermal Solutions, which we acquired in June 2025 for £4,800,000. They've got 11 employees and are based in Dursley, Gloucestershire and have been positioned into our lab equipment division. Seven are expert designers and manufacturers of specialist furnace systems and environmental chambers. These systems are capable of going from almost absolute zero to over 3,000 degrees c. Their focus is on advanced material testing and processing applications, specifically within highly technical and high value markets such as aerospace, semiconductors, and most recently, in the nuclear space, as Steve mentioned earlier. They will remain autonomous as part of our decentralized model.

10:13 Our second and most recent acquisition, PRP Optoelectronics, was completed in February 2026 for a total consideration of 9,300,000. They're based in Swindon with 33 employees, and they're sitting within our industrial and scientific census division. ERP are specialists in the design and manufacture of custom high performance micro LED systems. And whilst they make LED components for optics, industrial printing, and purification systems, their core focus is the supply of mission critical components such such as instrumentation, warnings, panels, and switches for civil and military avionic platforms, including the Eurofighter Typhoon f 16, f 22, and the Airbus a three twenty.

11:01 ERP would also be kept autonomous as part of our structure. Since joining the group, the integration of both companies has already gone very well with the leaders of each business settling in and already exploring synergies across all divisions within the group. I shall now hand you over to Ami for our financial overview of the year. Thank you, James. Afternoon, everyone. Looking at the financial highlights. SDI has had a good year. It was second half weighted as we expected at the interims. This was due to the timing of deliveries on some large contracts. I'll talk about this in more detail later on. This drove this particularly strong organic revenue growth over the second half of the year.

11:48 We saw over 7% growth due to acquisitions. And the strategy that we have implemented over the last couple of years has driven organic revenue growth of above 5% for the full year. Adjusted EBITDA improved to GBP 14,100,000, and adjusted operating profit grew to £11,600,000 whilst net operating margins improved from 15% to 15.5%. We saw strong growth in adjusted profit before tax and hence adjusted diluted earnings per share. Cash generated by operations exceeded GBP 10,000,000 once again. The acquisition of PRP was made in the last quarter of the year. This increased net debt to 24,000,000 at the period end.

12:38 Turning to the income statement. The GBP 4,700,000 acquisition growth includes PRP and Seven Thermal, which were new acquisitions this year. Inspect Vision revenues for the first half of this financial year and Collins Walker for the first eleven months represent the balance of the acquisition growth. Organic revenue growth was therefore 5.3% on a constant currency basis for the year, 6.7% in the second half alone, again, on a constant currency basis. Organic revenue growth was 7.6% in the second half if you include currency effects. Gross profit margins increased to 66%. This is on materials only. On a like for like basis, gross margins improved from 64.9% to 65.7%.

13:32 Pricing continues to be a key focus for the group.

13:37 Our cost base increased this year for a number of reasons. We saw the impact of increased employers' NI, minimum wage and apprenticeship levy, which increased operating costs. SDI also invested in additional management resources to support its organic strategy. Average net debt was higher this year, but interest rates were lower. This meant that finance charges increased by 200 ks compared to last year. The tax rate on adjusted PBT was unchanged at 22.7%, which meant that the adjusted diluted EPS grew at a similar level to adjusted PBT.

14:19 The next three slides provide a bit more detail on the financial performance of the three segments. We start with the Sensors division. PRP added 1,300,000 in revenues post acquisition. Excluding PRP, organic growth was an excellent 15.4%. This was driven by strong performances at Shell, Astells and Semtech. Shell delivered most of GBP 1,000,000 smart meter system project in Q4, and Semtech saw strong demand from its OEM customers for pH sensors and pH electrodes over the year. Astell saw growth from chemical dosing system revenues as well as spare sales. Peak had an excellent year, as Stephen mentioned, driven by demand from the glass industry.

15:08 This segment increased its EBIT by 17% to GBP 5,300,000. Operating margins of 25.1% compared to 26.4% last year. The reduced margins reflect contract mix.

15:24 Next, the Lab Equipment division. Better year for this segment. Seventherm will join the division early in the financial year and added GBP 1,800,000 in revenues. Organically, segment grew by 4.8%. SafeLab, Monmouth and LTE all had good years from a revenue perspective. The large government contract Stephen referred to was largely delivered in Q4. Monmouth saw growth in clean room sales, and LTE's product range showed year on year improvement, while Synoptics continued to see a slower market.

16:02 The segment increased its EBIT by 30% to NOK 3,500,000. Net operating margins improved to 13% or 7% providing a positive mix impact. Next, the product division. Acquisition revenues become organic twelve months from the date of acquisition, and since BetVision and Collins Walker contributed 1,500,000 in non organic revenues. The division saw largely flat revenues this financial year on an organic basis. Overall, there was a small organic decline of half a percent. ASIC had a very strong year delivering the large professional astronomy contract Stephen referred to.

16:47 Both Fraser and Gratiklis were largely flat revenue wise. Scientific vacuum systems saw a slower period of trading as they worked on one large program compared with two in the comparative period. As Stephen mentioned, the second large contract worth GBP 2,200,000 was won late in the financial year.

17:08 The segment increased its EBIT by 23% to GBP 6,100,000. Net operating margins increased to 23% due to the excellent performance from Attic and improved margin and overhead management at Friesen.

17:27 Turning to cash. SDI generated a cash of £10,200,000 in FY 'twenty six, which compares to £12,900,000 last year. FY 2025 was a very strong year for cash with the working capital at the end of that year at a very low level. For this year, working capital has increased by GBP 3,000,000.

17:50 Of this, trade debt has increased by GBP 1,500,000, with a lot of activity in the last two months of the period. Debt to days remain low at GBP 44,000,000, similar to last year end. Inventories increased by GBP 1,000,000. These were across most businesses with the largest increases at Attic and Monmouth. Other debtors direct creditors increased by a net GBP 1,100,000. The largest component was 500,000 relating to service SVS, whose final cash flows and an ongoing long term contract with our UK government customer will not be received until this financial year.

18:30 This slide shows graphically the movements in net debt. 10,200,000 in cash generated by operations is on the left hand side of the graph. Now utilization of that cash is illustrated on the right. We ended the year with GBP 24,000,000 of debt, excluding leases, and this compares to GBP 13,800,000 at the beginning of the financial year.

18:53 We renegotiated our bank facility over the autumn for some improved terms. This provides 25,000,000 in committed funding for another three years to November 2028, with a further two option years available. A further £15,000,000 accordion option was available to SDI at HSBC's discretion. 6,000,000 of the 15,000,000 accordion was exercised in February to fund the acquisition of PLC, leaving 9,000,000 of the accordion available at the end of the period. There was headroom of 4,000,000 on the RCF at the peak at the year end.

19:30 Our leverage at year end was 1.7 times net debt to EBITDA, driven by the acquisition of PRP late in the financial year. By the end of June twenty twenty six, gross borrowings reduced to GBP 26,000,000, meaning the RCF headroom had increased to GBP 5,000,000. There was 700,000 in outstanding deferred consideration at the year end relating to PRP, and this was paid in May. Now I'd like to hand back to Stephen, who will take you through the outlook. Thank you, Ami. Now looking forward to our next year.

20:07 For the future, our strategy remains consistent and focused on delivering growth, both organically and inorganically. We will continue to leverage our expanded management bandwidth to drive operational excellence, promote cross selling synergies and, of course, invest in R and D. We entered the new financial year with strong momentum, following our 8% H2 organic growth and our acquisition pipeline remaining robust and actively managed. With our renewed credit facility, we have significant firepower and the capacity to execute on future opportunities. And finally, we expect to deliver FY 2027 performance in line with market expectations and remain confident that we will deliver sustainable, compounding, and long term value to all of our stakeholders.

21:01 Thank you.

21:03 That's great. Thank you very much indeed for your presentation. I will now bring your cameras back up for the Q and A. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that recording of this presentation along with a copy of the slides and the published Q and A, can be accessed via our investor dashboard. And Ami, at this point, if I may hand over to you to chair the Q and A. Read out the questions where appropriate to do so, and I'll pick up from you at the end. Thank you. Great. Thank you. So the first question that I've got is, what do you know about this new shareholder in your register who's built up a 13% stake?

21:43 And what do you know of this intention? I'll hand that one to you, Susan. Yeah. Sure. Okay. Whilst we can't control the adviser shares, of course, because we're a public company, we can confirm that we do have active engagement with Mikael and a lot of course, along with our major other shareholders. The good news is that he really understands our business model and has he's confirmed that he is supportive of the direction and strategy of the business. He has given us some really valuable feedback, and he does add quite a lot of value to the to the business. His background as well also brings value. So he he he does seem to be a very supportive shareholder. Okay. Next one.

22:30 Will you be looking for bigger companies to buy going forwards? K. I'll I'll give that to you, James. Okay. Sure. So the intention long term and foreseeable future is not to go bigger in terms of acquisition sizes. We're likely to do more quantities of the range that we've been focused on already, which is the 1 to £1,500,000 EBIT range. What you're likely to see in the coming years is that we will do less of the smaller sizes, which historically we've been looking at about half a million or so EBIT. So we suspect they will become a bit less frequent, and they will be focused on bolt ons rather than the autonomous ones, which is the £1,000,000 plus EBIT.

23:16 Okay. Now there's two questions on AI. First question is what's your view on AI and its potential impact to SDI?

23:24 There's a second question on the same theme, which is how much of a threat to SDI's AI? The key add to industrial businesses from AI is cost reduction and more output with less people. SDI's small operating units means there is no scaling to be had versus advantage larger competitiveness. Steven, do wanna take this one? Yeah. Of course. AI is a very exciting topic, and, we can probably talk all day about about that one. But and AI how how does AI relate to to SDI? So there there's a couple of factors here to consider. First of all, in terms of a threat to to AI to as AI to SDI, that's that's something which we do review on a very very regular basis. The good news is that our model, being a largely manufacturing model, we do we do not see AI being a particular threat to us, where we can where what we do is not easily replaceable by by AI in any stretch. We also operate in very in very niche industries, and we also supply very niche equipment as well, which again is not replaceable

24:34 by AI. And as we also feed that into our m and a strategy as well. So whenever we're looking at a business, it is actually one of our selection criteria is could is there a possibility of this being taken out or at least reduced by AI? And really, if the question is is yes, then we we typically would would factor that into the deal. The other side, really, from an operational standpoint, is something that that, again, we we're we're very very hot on, and that is is and I think we can clearly report that our portfolio of companies are well ahead in terms of AI adoption, especially where it provides a key technological advancement in their fields. A couple of businesses, Inspect Vision and Synoptics is integrated as a as a vital business tool into into the products themselves, particularly InspectVision where it uses AI for various code generation, which which is really good, and it has improved efficiency there quite quickly. For example, time to market of of software updates has been really really powerful and really advantageous to us going forward.

25:43 At group level, we do leverage AI tools probably more extensively than than than what we did, and and that's improving. And we're we're looking at more formal AI integration possibilities as well, identifying areas where we can improve efficiencies going forward. So it's it's we we we do need to be ahead of the curve. Are we quite there yet? No. But we're we're we're very, aware of it. Okay. The next here for me. Is the jump in receivable days due to acquisitions rather than existing customers paying slower? Okay. So the the the trade deficit days were 44 at the period end. In terms of absolute debtors, yes, the the debtor's level increased due to acquisitions. But in terms of debtor days, it was 44, which is the same at last year end. So existing customers are not paying us lower We are collecting in line with what we've done before.

26:39 If you look at it in terms of other debtors, then as I mentioned on the presentation, there is some working capital tied up with scientific vacuum systems, which will be recovered in the first half of this year. It's just a routine cash flow on a at the end of a contract, it's just moved to the right. And that's the other factor within receivables junk. Okay. Next one's for me as well. Do you pay for all your acquisitions by debt? Well, at the moment, yes, we do. That's how we do. So I I hope the way we do things is we pay down the debt through the through our cash flows then leverage up again to buy another business. And I guess that will be the business model going forward for now. I think that's we said that before, and that that will continue.

27:29 So Neil, a quick question from the next one. Can you provide some more color on the FY guidance? Did I understand it correctly that Q1 started with 8% growth? And then the full year guidance, you can find on the press release for '26 and for '27 as it was coming in today. So I'll point you towards there instead of trying to quote the numbers down. But in terms of the last question or last part of the question, which was did Q1 start with 8% growth? No, no, that's not what the presentation said. We haven't finished Q1 yet. Q1 finishes at the end of this week. It was the second half of FY 2026, which would have showed the, in absolute terms, 8% organic growth. So, yes, we did have organic growth, but it's in the second half of the last financial year, not q one.

28:19 But we can confirm that that the start of FY twenty seven has started strongly. We as as Andy said, we haven't closed q one yet, but it is is looking pretty strong at the moment, both from a from an order book standpoint as as well as as I could. So we're we we are we are quite optimistic about the year going forward. Do we have any concern over our new debt levels against our cash levels? I think what that means is that in terms of our leverage. So we're at 1.7 times in net debt to adjusted EBITDA. The limit's 2.5 times, so we've got plenty of headroom. That started to come down and indeed has come down since year end and will continue to come down as we generate more cash. So there's no concern here. We're cash generative, and that level will and we will continue to reduce our debt as the year goes on.

29:09 As we said, when we made the acquisition for PRP, which is where they got the additional debt came from. It sounds as though H2 benefited from certain large contracts at certain businesses. How confident are you that the recent momentum can be sustained? Well, those contracts, we knew about right at the beginning of the financial year, and we knew that would be second half weighted. Obviously, we have a budget for the current financial year. We don't quite have that profile this year. For the first half, we're looking at a slightly better first half, second half split than last year. So you should so we should ought to see some more organic growth again at the first half.

29:56 But we are confident. I think that's what we said in terms of the guide in terms of students. The good news as well that the the first half of this year is is not necessarily supported or prompted by by significantly large contracts. That's right. Yeah. So we've got we've got much more much smoother profile going into this half, which is which is why the the confidence and which is why the the the more even h one, h two split that we that we didn't have last year. That's great, Steven. Amy James, if I may just jump back in there as you have addressed all those questions for investors today. So thank you very much indeed. But Stephen, before I redirect investors to provide you with their feedback, which one is particularly important to yourself and the company, could I please just ask you for a few closing comments?

30:46 Yes, of course. I'd just like to thank everyone for joining and taking the time to listen to us and to the presentation and and, and all the good questions. The questions were good and very relevant. I'd also like to thank all of our stakeholders, for their continued support, and, and look forward to, to to keeping you fully commit communicated to and, and the Nilip as we as we continue our journey. So thank you very much. Fantastic. Well, look, guys. Thank you for updating investors today. Could I please ask investors not to close this session as you now will be automatically redirected to provide you feedback, which will help the company better understand your views and expectations. On behalf of the management team, we would like to thank you for attending today's presentation, and good afternoon to