SDI Group (SDI) H1 2025 earnings summary

Executive summary

• Revenue for H1 FY25 was £30.9m, down 4% year-on-year, with a 5.7% organic decline and 1.5% inorganic growth; trading and order intake improved from September, supporting confidence for H2.

• Gross profit margin improved to 65.4% from 63.0% year-on-year, reflecting successful pricing actions.

• Cash generated from operations increased to £4.7m (H1 FY24: £3.3m), with free cash flow rising to £2.2m from £0.4m.

• Acquisition of InspecVision, a profitable metrology business, completed for approximately £6.1m, expected to be earnings enhancing and expanding presence in high-value markets.

• Strategy focuses on organic growth, portfolio optimization, and value-enhancing acquisitions, with strengthened management and collaboration across businesses.

Financial highlights

• Adjusted operating profit was £3.9m (down 12.1% year-on-year); reported operating profit was £2.4m; adjusted profit before tax was £3.2m; reported profit before tax was £1.7m.

• Adjusted diluted EPS was 2.37p (down 11.6%); reported diluted EPS was 1.18p (down 37.6%).

• Net debt (excluding leases) rose to £17.1m, mainly due to the InspecVision acquisition; net debt/EBITDA at 1.4x.

• Adjusted PBT tax rate increased to 22.8% (H1 FY24: 19.2%) due to R&D credit changes; effective tax rate reported at 26.8%.

• Free cash flow conversion improved significantly, and net £2m of debt was paid down in H1 using operational cash flow.

Outlook and guidance

• Full-year profits expected to be in line with market expectations, with a stronger H2 supported by improved orderbook and gross margins.

• Group revenues for FY25 expected to be lower due to slower lab equipment sales, but offset by improved margins and cost efficiencies.

• Market profit expectation for FY25 is Adjusted EBIT of circa £10m.

• Acquisition pipeline remains robust, with capacity for further targeted acquisitions.

• Focus on driving organic growth, cash generation, and collaboration across portfolio businesses.