Scientific Digital Imaging (SDI.L AIM¬†All-Share, Market Cap ¬£52m, 53.5p, 4.1% of JIC Portfolio and 8.9% of JIC Top 10)¬†
Results for the year ended 30th April¬†
¬∑¬†¬†¬†¬†¬†¬†Revenue increased by 20% to ¬£17.4m (2018: ¬£14.5m)¬†
¬∑¬†¬†¬†¬†¬†¬†Organic revenue growth of 5% with¬†a similar¬†performance from both segments¬†
¬∑¬†¬†¬†¬†¬†¬†Gross margin at 66.1% (2018: 65.8%)¬†
¬∑¬†¬†¬†¬†¬†¬†Adjusted profit before tax* increased by 32% to ¬£3.0m (2018: ¬£2.3m)¬†
¬∑¬†¬†¬†¬†¬†¬†Profit before tax increased by 24% to ¬£2.1m (2018: ¬£1.7m)¬†
¬∑¬†¬†¬†¬†¬†¬†Cash generated from operations increased by 28% to ¬£3.6m (2018: ¬£2.9m)¬†
¬∑¬†¬†¬†¬†¬†Net debt** at 30 April 2019 of ¬£1.6m
Ken Ford, Chairman of SDI said:
“We are pleased to report on another year of growth. The existing business together with a full year of sales from the new acquisitions Fistreem International, Thermal Exchange, Graticules Optics, and MPB Industries are expected to drive growth and profitability in 2019-20. To maintain and develop its portfolio, SDI will continue its proven strategy of organic and acquisitive growth. The Board is confident that the Group will continue to deliver profitable growth through increased revenue and new acquisitions in 2019-20, and is encouraged by the performance of the business in the new financial year.”¬†
Conclusion: It has beaten comfortably its forecast of turnover of at least ¬£17m made in its May trading update. It‚Äôs good to see solid organic growth in the businesses it owned at the start of the year. The outlook statement reads well, and current trading is encouraging. It says that it expects to make at least one acquisition this year. I would be amazed if it was less than three. On current¬†forecasts, the shares are valued at 16.2x April 2020 earnings for 27% growth. I would expect that rating to climb towards 20x, which with earnings enhancing acquisitions on top, would suggest another good year for the share price ahead. Happy Holder!
Strix (KETL.L, Aim 100, Market cap.¬†¬£304m, 160p, 4.7% of JIC Portfolio and 9.4% of JIC Top 10):¬†
Trading update for six months ended 30th June.
‚ÄúThe Group has delivered a solid performance for the period and the Board confirms that it expects to report results in line with market expectations for the financial year. The Group expects to report growth in Adjusted Profit after Tax and a good net debt position given the cash committed to the new manufacturing facility, the acquisition in March 2019 and the increased dividend to shareholders.‚ÄĚ
Outlook and Notice of Interim Results
The Group has delivered a solid performance for the period and the Board confirms that it expects to report results in line with market expectations for the financial year. Given the Group’s performance in H1 2019 and the Board’s confidence in the continued strength of its cash generation, the Board re-confirms its intention to pay total dividends of 7.7p per share in respect of the 2019 financial year, an increase of 10% on the previous year.
Conclusion: A solid trading update in which it points to volatility in the market due to trade wars and Brexit etc but it has maintained its market share and invested in protecting patents and moving to a new manufacturing facility. The main point is that this year‚Äôs 10% dividend increase is confirmed to 7.7p giving a yield of 4.8%. Mr Woodford‚Äôs stake still hangs over the stock I believe but that situation should be resolved at some stage. This is a solid company with strong cash flow. It is not the most exciting position in the Portfolio and to be honest I probably wouldn‚Äôt add it to the Portfolio if I didn‚Äôt hold it. Happyish Holder!