Industrials & Support Services

SDI Group plc

Market Cap (£m) 153.3
Listing AIM

Analysts

Company Description

SDl 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.

Investment Summary

SDI Group successfully completed 11 acquisitions from 2014 to 2020 and the group demonstrated its resilience during 2020, with one-off COVID-19-related contracts boosting sales of two product lines, offsetting the effects of the pandemic's disruption to other group businesses. SDI Group historically funded acquisitions largely through issuing equity. However, management prefers to acquire using internal funding, and acquisitions since 2018 have been mostly self-funded. Growing free cash generation should enable SDI Group to fund future acquisitions from internal cash flows, reducing the likelihood of the group issuing equity to maintain its growth profile. Earnings forecasts only reflect organic growth, and future acquisitions have to potential to boost SDI Group's earnings significantly, based on the group's proven track record of delivering significant inorganic earnings growth.

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Company Management Team

  • Mike Creedon

    Chief Executive Officer

    Mike joined the Board in 2010. A Chartered Certified Accountant with an MBA from Henley Management College, Mike brings to SDI considerable experience of working within quoted companies and technology businesses, and fundraising, mergers and acquisitions. In particular, he has recent experience of AIM-listed technology companies. Previous Finance Director posts include Ninth Floor plc and Ideal Shopping Direct plc.

  • Jon Abell

    Chief Financial Officer

    Jon joined the Board in July 2018 and has over 35 years of business experience. Prior to joining SDI he was Divisional VP of Finance, Electronic Instruments Group at Ametek, Inc. where his principal duties include performance management, M&A, business controls and accounting for several scientific and industrial instrument businesses. Jon started his career as a financial analyst and then management accountant for various industrial companies in the UK and Italy, before undertaking his MBA at Columbia Business School. He subsequently went on to senior financial management roles in Germany, the Netherlands, USA and UK including at Philips Electronics and Broadcom Inc.