SDI Group (SDI) Investor Q&A Session - February 2025

SDI Group’s CEO, Stephen Brown, CFO, Amitabh Sharma and Head of Corporate Development, James Dimitriou, answer investor questions following the Group’s recent December Interims.

Read the latest research here: https://progressive-research.com/company/sdi-group-plc/

00:00 Opener

00:16 Introduction

00:45 Can you talk about opportunities going forward, and can you outline how you are encouraging collaboration between the businesses?

04:17 Are there any larger one-off acquisitions?

07:09 Are you starting to see these synergies between the businesses drive margin or sales revenue?

08:30 What further comfort can you give on the ability to hit FY25 forecasts, and did the order book at the end of October give you similar levels of cover that you've seen in past years?

09:23 Is the orderbook strong across all three segments, and could you give some detail on the drivers of that?

10:43 Are you seeing any further weakness in China, and will this market be a focus going forward?
12:00 Can you talk about potential tariffs and the opportunities for geographical expansion?

15:23 Just looking at momentum, you've mentioned that trading has continued strongly into H2. Is the sequentially month-on-month?

15:56 Can you give us a sense of how much business is repeated, recurring revenues vs one-off capital equipment?

16:16 And we've seen generally tougher, challenging trading conditions, but as to your portfolio, where do you see the most growth come from, and what are you doing to address the opportunities?

18:08 You've had a strong track record in terms of free cash flow, and you've successfully funded acquisitions from cashflow, do you see a change to this strategy going forward?

19:39 Could you give a bit more colour around cost-cutting and investment in the business in capex?

21:35 When do you expect business growth to re-accelerate, and in particular, when did life sciences start picking up again?

22:54 Do you think the existing portfolio can generate growth between 5 and 10 percent?

24:00 What's the longer-term sustainable margin target?

24:55 Are there any other big operational or management structure changes that we should expect?

25:39 Are you happy with the structure in terms of managing the operations and driving growth through acquisitions?

26:40 Could you say any more about the M&A opportunities and your EBIT multiple opportunities for those?

28:07 You've outlined that there are benefits for companies that join SDI, can you just outline why companies become part of the SDI group?

28:38 Outro

SDI Group is an AIM-quoted group specialising in the acquisition and development of a portfolio of companies that design and manufacture niche analytical technology products for use within digital imaging and sensing and control applications in science, technology and medical markets. The group operates a well-established 'buy and build' strategy, supplementing organic growth with earnings-accretive acquisitions of complementary businesses that have sustainable profits and cash flows. Targets are primarily UK businesses with established reputations, capable of achieving significant organic growth through developing export markets. SDI Group takes a decentralised approach, with seasoned local management given broad discretion to run group businesses within defined limits. SDI Group typically acquires businesses generating up to ?1m EBIT for around 4-6 times EBIT plus net assets, including earnout payments.