Last checked at 8 Jan 2016 07:00
Scientific Digital Imaging plc
("SDI", the "Company" or the "Group")
(AIM: SDI)
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO 31 OCTOBER 2015
The Board of Scientific Digital Imaging plc, the AIM quoted group focused on scientific and technology products for use in applications including life sciences, healthcare, astronomy, consumer manufacturing and art conservation, is pleased to announce its unaudited interim results for the six months ended 31 October 2015.
Highlights
· Revenue increased by 15% to £3,671,000 (2014: £3,188,000)
· Adjusted operating profit* was £189,000 (2014: loss £20,000)
· Operating profit was £29,000 (2014: loss £207,000)
· Gross margin increased to 58.0% (2014: 57.6%)
· New acquisition Sentek Limited ("Sentek") acquired on 28 October 2015. SDI paid £2,000,000. The acquisition was funded initially using existing cash resources and a debt facility, with the majority of the debt subsequently repaid by raising £2,500,000 in equity after the period end
· Post period event - settlement following a general meeting of the successful equity fundraising of £2,500,000 (before expenses) to repay debt from acquiring Sentek, with the balance of net proceeds to be reinvested in the business
· Artemis CCD continued to report increased levels of sales and profitability
* Before transaction costs, reorganisation costs and share based payments
Ken Ford, Chairman of SDI, commented:
"The Board anticipates that the recent acquisition of Sentek will be earnings enhancing in the first full year of ownership. The Board expects SDI to continue to make good progress over the remainder of the financial year as we continue to pursue our strategy of organic and acquisitive growth."
Enquiries
Scientific Digital Imaging plc 01223 727144
Ken Ford, Chairman
Mike Creedon, CEO
www.scientificdigitalimaging.com
finnCap Ltd 020 7220 0500
Ed Frisby/Simon Hicks - Corporate Finance
Mia Gardner- Corporate Broking
JW Communications 07818 430877
Julia Wilson - Investor & Public Relations
Copies of the interim report are being sent to shareholders and can also be viewed on the Company's website: www.scientificdigitalimaging.com
About SDI:
Scientific Digital Imaging plc ("SDI") designs and manufactures scientific and technology products for use in applications including life sciences, healthcare, astronomy, consumer manufacturing and art conservation. SDI plans to continue to grow through its own technology advancements as well as strategic, complementary acquisitions.
IMPORTANT NOTICES
No statement in this announcement is intended to be a profit forecast or estimate and no statement in this announcement should be interpreted to mean that earnings per share of the Company for the current or future financial years would necessarily match or exceed the historical published earnings per share of the Company.
Interim 2015 highlights
· Revenue increased by 15% to £3,671,000 (2014: £3,188,000)
· Adjusted operating profit* was £189,000 (2014: loss £20,000)
· Operating profit was £29,000 (2014: loss £207,000)
· Gross margin increased to 58.0% (2014: 57.6%)
· New acquisition Sentek Limited ("Sentek") acquired on 28 October 2015. SDI paid £2,000,000. The acquisition was funded initially using existing cash resources and a debt facility, with the majority of the debt subsequently repaid by raising £2,500,000 in equity after the period end
· Post period event - settlement following a general meeting of the successful equity fundraising of £2,500,000 (before expenses) to repay debt from acquiring Sentek, with the balance of net proceeds to be reinvested in the business
· Artemis CCD continued to report increased levels of sales and profitability
* Before transaction costs, reorganisation costs and share based payments
Synoptics
Synoptics designs and manufactures special-purpose, innovative instruments and systems for use mainly in the life science industry. The Company exploits digital imaging technologies for a range of disciplines and offers its products through four brands:
· Syngene produces equipment for life scientists to image and analyse electrophoresis gels for DNA and protein analysis
· Synbiosis produces equipment for microbiologists to automate microbial colony counting
· Syncroscopy provides systems that apply digital imaging techniques to microscopy applications, such as life and material sciences
· Synoptics Health focuses on imaging techniques within the hospital and clinical environments using the ProReveal system.
Artemis CCD
Artemis CCD designs and manufactures high sensitivity cameras for deep sky astronomical and life science imaging under the Atik brand.
Opus Instruments
Opus designs and manufactures an infrared camera, Osiris, which is used to examine works of art using infrared camera technology.
Sentek
Sentek manufactures and sells both reusable and single-use electrodes for the measurement of pH and conductivity of aqueous solutions. Applications range from laboratory use to manufacture of foods, beverages, pharmaceuticals and personal care products.
Chairman's statement
OVERVIEW
In the six-month period ended 31 October 2015, SDI acquired Sentek. The acquisition was completed on 28 October 2015 and therefore has very limited effect on the six month period results. Going forward, we expect that the acquisition of Sentek will be earnings enhancing in the first full year of ownership.
SDI revenue was £3,671,000 in the six months to 31 October 2015 (increased by £483,000 relative to revenue of £3,188,000 for the six months to 31 October 2014). The increase in revenue arose from Synoptics and Atik over the six-month period.
The established Atik brand continued to report increased sales revenue and profitability.
Basic and fully diluted earnings per share were both 0.04p (2014: basic and fully diluted loss 0.82p).
The Group's cash position reduced by £619,000 to £257,000 over the period, due to the utilisation of internal funds to contribute to the purchase of Sentek. After the period end, SDI raised £2,500,000 before expenses through the issue of equity and borrowed £500,000 from its bank, used to repay short-term debt funding the purchase of Sentek with the remainder increasing the Group's working capital reserves.
PRODUCT PORTFOLIO
Syngene remains the largest of the Synoptics brands. It has been continuing to improve its software and hardware, for a number of its products. We believe that these improvements will be attractive to our current and potential customers.
During the period, Synbiosis released a new version of ProtoCOL 3, including antibiotic susceptibility testing software. The new software is stimulating additional interest in ProtoCOL 3; Synbiosis believes that this will translate into sales growth in 2016. The division is currently developing a new system, ChromaZona, for antibiotic resistance testing in clinical laboratories. It is currently undergoing clinical certification as it will be used for clinical diagnostics and we can then seek to exploit new large and growing markets including hospital laboratories.
Synoptics Health has continued to sell ProReveal, a test to detect proteins on surgical instruments. The absence of an official limit of acceptable protein contamination on re-usable surgical instruments was previously a significant barrier to the adoption by the NHS of ProReveal. In May 2015, the UK Department of Health (DoH) published new guidelines that define a limit for acceptable protein contamination on re-usable surgical instruments (http://www.gov.uk/government/publicatons/ guidance-from-the-acdp-tse-risk-management-subgroup-formerly-tse-working-group). We expect the publication of these guidelines to accelerate adoption of ProReveal for this use. ProReveal is the only available CE-marked instrument capable of determining quantitatively the level of protein contamination on instruments. Furthermore, it has been shown to be sensitive below 50ng of protein and thus fulfils the DoH requirements for greater sensitivity for neurosurgical instruments.
Since acquiring Opus Instruments in 2014, Osiris camera sales have remained steady. The Board believes that it will continue to make a positive contribution to SDI's trading in 2016.
In the first half of the financial year, Atik reported growth in sales and profitability. Atik constantly analyses the market and seeks to develop cutting edge products to attract a wider customer base. The recently introduced Infinity camera marks a departure from its existing astro-imaging products which are intended to collect data that is subsequently processed to a finished picture. The Infinity is used with a telescope to provide astronomers with near real time visualisation of faint deep sky objects such as galaxies and nebulas. The camera is proving particularly popular with astronomers who had been reluctant to try astro-imaging due to the steep learning curve, as well as those involved with outreach projects. We believe that the Infinity camera will help introduce the Atik brand to a new group of astronomers and provide an easy entry point to the rewarding astro-imaging hobby market.
SDI's latest acquisition Sentek differs in its business profile from SDI's other established divisions. Sentek makes and sells consumables rather than equipment and software, so it has a stream of repeat business. Sentek's products are electrodes that have a working life of only six to twelve months and need to be replaced regularly. Sentek also produces a single-use electrode for bioprocessing applications, a fast-growing area in pharmaceutical and biotech companies. The business has been profitable since incorporation in 1991; it has had a revenue CAGR* over the past five years of 9% and a five-year profit before tax CAGR of 33%.
ACQUISITIONS
SDI is actively seeking further profitable scientific and technology based companies to continue its buy and build strategy.
OUTLOOK
The Board anticipates that the recent acquisition of Sentek will be earnings enhancing in the first full year of ownership. The Board expects SDI to continue to make good progress over the remainder of the financial year as we continue to pursue our strategy of organic and acquisitive growth.
Ken Ford, Chairman
8 January 2016
* CAGR = compound annual growth rate
Consolidated income statement
Unaudited for the six months ended 31 October 2015
Note | 6 months to 31 October 2015 Unaudited £'000 | 6 months to 31 October 2014 Unaudited £'000 | 12 months to 30 April 2015 Audited £'000 | |
Revenue | 3,671 | 3,188 | 6,955 | |
Costs of sales | (1,541) | (1,353) | (2,837) | |
Gross profit Administrative expenses | 2,130 (1,941) | 1,835 (1,855) | 4,118 (3,725) | |
Adjusted operating profit/(loss)
Reorganisation costs Share based payments Acquisition and fundraising costs Aborted transaction costs | 189
(17) (4) (139) - | (20)
(51) (5) - (131)
| 393
(200) (8) (126) - | |
Operating profit/(loss) | 29 | (207)
| 59 | |
Net financing expense | (16) | (20) | (36) | |
Profit/(loss) before taxation | 13 | (227) | 23 | |
Income tax expense | - | - | 21 | |
Profit/(loss) for the period | 13 | (227) | 44 | |
Earnings per share |
| |||
Basic earnings/(loss) per share | 2 | 0.04p | (0.82p) | 0.15p |
Diluted earnings/(loss) per share | 0.04p | (0.82p) | 0.15p |
Consolidated statement of comprehensive income
Unaudited for the six months ended 31 October 2015
6 months to 31 October 2015 Unaudited £'000 | 6 months to 31 October 2014 Unaudited £'000 | 12 months to 30 April 2015 Audited £'000 | |
Profit/(loss) for the period | 13 | (227) | 44 |
Other comprehensive income Items that will be reclassified subsequently to profit and loss |
| ||
Exchange differences on translating foreign operations | - | 38 | 40 |
Total comprehensive profit/(loss) for the period | 13 | (189) | 84 |
Consolidated balance sheet
Unaudited at 31 October 2015
Note | 31 October 2015 Unaudited £'000 | 31 October 2014 Unaudited £'000 | 30 April 2015 Audited £'000 | |
Assets |
| |||
Non-current assets |
| |||
Property, plant and equipment | 367 | 379 | 417 | |
Intangible assets | 4,103 | 2,064 | 2,012 | |
Deferred tax asset | 105 | 99 | 105 | |
4,575 | 2,542 | 2,534 | ||
Current assets | ||||
Inventories | 1,159 | 1,059 | 982 | |
Trade and other receivables | 1,244 | 1,344 | 1,584 | |
Current tax assets | - | - | 5 | |
Cash and cash equivalents | 365 | 316 | 876 | |
2,768 | 2,719 | 3,447 | ||
Total assets | 7,343 | 5,261 | 5,981 | |
Liabilities |
| |||
Current liabilities Overdraft |
108 |
- |
- | |
Trade and other payables | 1,432 | 1,527 | 1,452 | |
Provisions for warranty | 19 | 17 | 18 | |
Borrowings | 3 | 1,343 | 143 | 269 |
Current tax payable | - | - | - | |
2,902 | 1,687 | 1,739 | ||
Non-current liabilities |
| |||
Borrowings | 3 | 372 | 198 | 156 |
Trade and other payables | 73 | 138 | 101 | |
Deferred tax liability | 174 | 169 | 174 | |
619 | 505 | 431 | ||
Total liabilities | 3,521 | 2,192 | 2.170 | |
Net assets | 3,822 | 3,069 | 3,811 | |
Equity |
| |||
Share capital | 329 | 278 | 329 | |
Merger reserve | 3,030 | 3,030 | 3,030 | |
Share premium account | 1,472 | 1,063 | 1,478 | |
Foreign exchange reserve | (72) | (71) | (69) | |
Own shares held by Employee Benefit Trust | (85) | (85) | (85) | |
Other reserves | 80 | 70 | 73 | |
Retained earnings | (932) | (1,216) | (945) | |
Total equity | 3,822 | 3,069 | 3,811 |
Consolidated statement of cash flows
Unaudited for the six months ended 31 October 2015
6 months to 31 October 2015 Unaudited £'000 | 6 months to 31 October 2014 Unaudited £'000 | 12 months to 30 April 2015 Audited £'000 | ||
Operating activities |
| |||
Profit/(loss) for the period | 13 | (227) | (44) | |
Depreciation and amortisation | 256 | 282 | 571 | |
Finance costs and income | 16 | 20 | 36 | |
Taxation expense in the income statement | - | - | (21) | |
Increase in provisions | 1 | - | 1 | |
Employee share based payments | 4 | 5 | 8 | |
Operating cash flow before movement in working capital | 290 |
80 | 639 | |
(Increase)/decrease in inventories | (177) | 58 | 135 | |
Changes in trade and other receivables | 340 | (52) | (298) | |
Changes in trade and other payables | (48) | 103 | (37) | |
Cash generated from operations | 405 | 189 | 439 | |
Interest paid | (16) | (20) | (26) | |
Income taxes (received)/paid | 5 | (35) | (4) | |
Cash generated from operating activities | 394 | 134 | 409 | |
Cash flows from investing activities | ||||
Capital expenditure on fixed assets | (97) | (62) | (255) | |
Expenditure on development and other intangibles | (137) | (159) | (299) | |
Acquisition of subsidiaries, net of cash | (2,111) | - | - | |
Proceeds from sale of property, plant and equipment |
40 |
- | 65 | |
Net cash used in investing activities | (2,305) | (221) | (489) | |
Cash flows from financing activities | ||||
Movement in finance leases | (13) | (12) | (33) | |
Share issue costs | (6) | - | - | |
Proceeds from share issue | - | - | 466 | |
Share based payment reserve | 7 | - | - | |
Repayment of borrowings | (50) | (118) | (30) | |
Other loans | 100 | - | - | |
Proceeds from bank borrowings | 1,253 | - | - | |
Net cash from/(used in) financing activities | 1,291 | (130) | 403 | |
Net (decrease)/increase in cash and cash equivalents | (620) | (217) | 323 | |
Cash and cash equivalents, beginning of period |
876 |
539 | 539 | |
Foreign currency movements on cash balances |
1 |
(6) | 14 | |
Cash and cash equivalents, end of period | 257 | 316 | 876 | |
Consolidated statement of changes in equity
Unaudited for the six months ended 31 October 2015
6 months to 31 October 2015 - unaudited | Share capital £'000 | Merger reserve £'000 | Share premium £'000 | Own shares held by EBT £'000 | Other reserves £'000 | Foreign exchange £'000 | Retained earnings £'000 | Total £'000 |
Balance at 1 May 2015 | 329 | 3,030 | 1,478 | (85) | 73 | (69) | (945) | 3,811 |
Share based payments Fundraising costs | - - | - - | - (6) | - - | 7 - | - - | - - | 7 (6) |
Transactions with owners | - | - | (6) | - | 7 | - | - | 1 |
Profit for the period | - | - | - | -
| - | - | 13 | 13 |
Foreign exchange on consolidation of subsidiary | - | - | - | - | - | (3) | - | (3) |
Total comprehensive income for the period | - | - | - | - | - | (3) | 13 | 10 |
Balance at 31 October 2015 | 329 | 3,030 | 1,472 | (85) | 80 | (72) | (932) | 3,822 |
6 months to 31 October 2014 - unaudited | Share capital £'000 | Merger reserve £'000 | Share premium £'000 | Own shares held by EBT £'000 | Other reserves £'000 | Foreign exchange £'000 | Retained earnings £'000 | Total £'000 |
Balance at 1 May 2014 | 278 | 3,030 | 1,063 | (85) | 65 | (109) | (989) | 3,253 |
Share based payments | - | - | - | - | 5 | - | - | 5 |
Transactions with owners | - | - | - | - | 5 | - | - | 5 |
Loss for the period | - | - | - | - | - | - | (227) | (227) |
Foreign exchange on consolidation of subsidiary | - | - | - | - | - | 38 | - | 38 |
Total comprehensive income for the period | - | - | - | - | - | 38 | (227) | (189) |
Balance at 31 October 2014 | 278 | 3,030 | 1,063 | (85) | 70 | (71) | (1,216) | 3,069 |
12 months to 30 April 2015 - audited | Share capital £'000 | Merger reserve £'000 | Share premium £'000 | Own shares held by EBT £'000 | Other reserves £'000 | Foreign exchange £'000 | Retained earnings £'000 | Total £'000 |
Balance at 1 May 2014 | 278 | 3,030 | 1,063 | (85) | 65 | (109) | (989) | 3,253 |
Shares issued | 51 | - | 415 | - | - | - | - | 466 |
Share based payments | - | - | - | - | 8 | - | - | 8 |
Transfer of equity on consolidation of shares | - | - | - | - | - | - | - | - |
Transactions with owners | 51 | - | 415 | - | 8 | - | - | 474 |
Loss for the year | -- | - | - | - | - | - | 44 | 44 |
Foreign exchange on consolidation of subsidiaries | - | - | - | - | - | 40 | - | 40 |
Total comprehensive income | - | - | - | - | - | 40 | 44 | 84 |
Balance at 30 April 2015 | 329 | 3,030 | 1,478 | (85) | 73 | (69) | (945) | 3,811 |
Notes to the interim financial statements
Unaudited for the six months ended 31 October 2015
The accompanying accounting policies and notes form an integral part of these interim financial statements.
Reporting entity
Scientific Digital Imaging plc (the "Company"), a public limited company, is the Group's ultimate parent. It is registered in England and Wales. The consolidated interim financial statements of the Company for the period ended 31 October 2015 comprise the Company and its subsidiaries (together referred to as the "Group").
Basis of preparation
The unaudited consolidated interim financial statements are for the six months ended 31 October 2015. These interim financial statements have been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively EU IFRS). The financial information for the year ended 30 April 2015 is based upon the audited statutory accounts for that year. The consolidated interim financial information has been prepared on the historical cost basis. The consolidated interim financial statements are presented in British pounds (£), which is also the functional currency of the ultimate parent company.
The consolidated interim financial information was approved by the Board of Directors on 7 January 2016.
The financial information set out in this interim report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The figures for the year ended 30 April 2015 have been extracted from the statutory financial statements of Scientific Digital Imaging plc which have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The financial information for the six months ended 31 October 2015 and for the six months ended 31 October 2014 has not been audited.
1. Principal accounting policies
The principal accounting policies adopted in the preparation of the condensed consolidated interim information are consistent with those followed in the preparation of the Group's financial statements for the year ended 30 April 2015.
The accounting policies have been applied consistently throughout the Group the purposes of preparation of these interim financial statements.
2. Earnings per share
The calculation of the basic earnings/(loss) per share is based on the profits/(losses) attributable to the shareholders of Scientific Digital Imaging plc divided by the weighted average number of shares in issue during the year, excluding shares held by the Synoptics Employee Benefit Trust. All profit/ (loss) per share calculations relate to continuing operations of the Group.
| Profit/(Loss) attributable to shareholders £'000 | Weighted average number of shares | Basic earnings/(loss) per share amount in pence |
Period ended 31 October 2015 | 13 | 32,912,308 | 0.04 |
Period ended 31 October 2014 | (227) | 27,777,308 | (0.82) |
Year ended 30 April 2015 | 44 | 28,902,787 | 0.15 |
The calculation of diluted earnings per share is based on the profits attributable to the shareholders of Scientific Digital Imaging plc divided by the weighted average number of shares in issue during the year, as adjusted for dilutive share options, dilutive deferred consideration and shares held by the Synoptics Employee Benefit Trust.
Diluted (loss)/earnings per share amount in pence | |
Period ended 31 October 2015 | 0.04 |
Period ended 31 October 2014 | (0.82) |
Year ended 30 April 2015 | 0.15 |
The reconciliation of average number of ordinary shares used for basic and diluted earnings is as below:
31 October 2015 | 31 October 2014 | 30 April 2015 | |
Weighted average number of ordinary shares used for basic earnings per share | 32,912,308 | 27,777,308 | 28,902,787 |
Weighted average number of ordinary shares under option | - | - | - |
Weighted average number of ordinary shares used for diluted earnings per share | 32,912,308 | 27,777,308 | 28,902,787 |
All share options are nondilutive at 31 October 2014, 30 April 2015 and 31 October 2015. Such options could potentially dilute basic earnings per share in the future.
3. Borrowings
31 October 2015 £'000 | 31 October 2014 £'000 | 30 April 2015 £'000 | |
Within one year: |
| ||
Bank finance Other loan | 1,167 150 | 100 - | 248 - |
Finance leases | 26 | 43 | 21 |
1,343 | 143 | 269 | |
After one year and within five years: | |||
Bank finance | 367 | 133 | 83 |
Other loan | - | 50 | 50 |
Finance leases | 5 | 15 | 23 |
372 | 198 | 156 | |
Total borrowings | 1,715 | 341 | 425 |
The Group utilises short-term facilities to finance its operation. The Group has one principal banker with an invoice discounting facility of up to £500,000. At the end of the period the Group had utilised £80,668 of this facility.
Scientific Digital Imaging plc
Beacon HouseNuffield RoadCambridgeCB4 1TFUK
Telephone: +44 (0)1223 727144Fax: +44 (0)1223 727101
Email: info@scientificdigitalimaging.com