SDI Group plc

Good afternoon and welcome to the STI Group plc final results investor presentation. Throughout this recorded presentation investors will be in listen only mode. Questions are encouraged and they can be submitted at any time using the Q&A tab situated on the right hand corner of your screen. Simply type in your questions and press send. Before we begin I would like to submit the following poll and I would now like to hand you over to CEO Stephen Brown. Good afternoon.

Good afternoon and a warm welcome to today's final results for the year ended 30th of April 2026. I'm Stephen Brown, CEO of SDI Group and joining me is our CFO Amit Sharma and Group Head of Corporate Development James Dimitriou. Today we'll walk you through our group summary, provide an operational overview, present the financial results for FY26 and discuss the outlook for next year. At the end we will answer any questions you may have. First let me introduce you to the SDI Group. We are a buy and build group with at the year end 18 established businesses with over 550 employees operating from 19 locations worldwide. We operate a decentralized model that fosters autonomy, independence and agility, with our focus being on high growth scientific niche markets. We have a proven strategy of combining organic growth with earnings enhancing acquisitions, having made 21 since 2014. In FY26, we achieved a total group revenue of circa £75 million, and this came from growth from all three of our divisions. This is in fact the highest level in STI's history. Also, with our operations being geographically diverse, we export more than 70% of our highly specialised products to international markets. Our buy and build model relies on a compounding cycle of growth. This cycle focuses on two key pillars, organic and inorganic growth. Organic growth strategies include driving operational excellence and promoting synergies to foster group culture Our model works as cash flow generated from organic activities feeds inorganic growth where we seek to acquire complementary profitable business in niche markets and this all feeds back to create a compounding effect That will provide a bit more detail on what we delivered during the year. This financial year has been one of real momentum for the HDI Group, moving beyond simply proving our resilience to actively delivering growth. This year demonstrates the success of our unwavering focus of the strategy we deployed previously. We delivered solid financial performance with circa 13% increase in group revenues driven by robust demand and an 8% increase in second half organic growth. We are proud to report that we expanded our group level management team and intend to strengthen our capacity for portfolio management and supporting our growth strategy. Our growth is further driven by two acquisitions that perfectly align with our strict criteria. We are proud to welcome Severn Thermal Solutions and PRP Optoelectronics. I would now like to provide a bit more colour on some of our key organic growth initiatives undertaken during the year. We focused on extracting tangible value from a group network, identifying opportunities to improve efficiencies and market access, as well as potential cross-selling opportunities across the portfolio. We invested in modern ERP systems at Fraser, LT and Peak to build a more resilient and scalable infrastructure. We've seen great cross-divisional collaboration, such as MoMA Scientific partnering with Fraser Antistatic to develop a market leading product leveraging individual products from each business. We also saw a second appearance as a collective at Lab Innovations Expo bringing five of our businesses together under a single banner to showcase an integrated product offering at the UK's leading industry event. Also to foster internal talent We've invested strategically in our people, sponsoring five colleagues into level six CMI senior management apprenticeships, ultimately lead to top tier recognised qualifications. This strong initiative will continue to grow into FY27 and beyond and will include a cross section of levels. We do this as part of our goal of continually building a robust and sustainable business. I would now like to give an operational overview of the business at divisional level. First of all, it's worth reiterating that all three of our divisions deliver growth in FY26. Our industrial and scientific sensor segment delivered excellent revenue growth of 23% to £21 million. To pick a few businesses within the segment, Child Instruments enjoyed a phenomenal year expanding in Formula One to supply 10 of the 11 teams and securing aerospace contracts for Tempest and Halospace. Centex successfully secured a multi-million contract with a multinational healthcare client for custom electrochemical blood gas sensors and Peak Sensors had a phenomenal year driven by thermocouple projects in the glass industry. As per usual, we have continued product development across the Group. One example of new products launched in the period is MPB's new long series 1200 flow meter, which is designed for gas and liquid measurement, typically used in the laboratory, industrial, as well as process control environments. The division was further boosted by the addition of PRP optoelectronics, more to follow on PRP. Now to our laboratory equipment segment where revenues increased more than 12% to £27 million. I'd like to highlight a few of the successes within the division. Safelab secured a major £1.3 million government contract to supply over 100 Air One XP4 fume cupboards in the defence industry. Monmouth expanded its capabilities by forming a lucrative exclusive partnership for Marshall Cleanrooms. LTE received a bulk order for flexible bespoke drying cabinets for a major client and several thermal solutions acquired in June 2025 proved their technological capabilities by finishing the pilot program for a new vacuum furnace alongside the UK AEA. Among new product launches in the segment was Safelab's new Air One C700 ductless for circulating a fume cabinet designed for industrial labs, universities, research facilities and higher education environments. Finally, the industrial scientific product division seen solid performance across the division with revenues of 6% to £27 million. Added cameras performed very strongly, securing a $4 million professional astronomy contract and winning a Pivotable Integration into a prestigious Deep Space Observation Telescope project, the world's largest all-lens telescope. InspectVision continued to gain traction in North America, completing installations for key multinational companies across the aerospace, e-commerce and industrial manufacturing sectors and receiving the Best Award 2025 for Innovation at the leading industry conference. Brazier saw increased activity from South Korea. Scientific vacuum systems demonstrated strong customer stickiness, securing a £2.2 million contract with the leading global consumer brand and apply thermal control, releasing new portfolio products to address regulatory changes relating to phase downs, unbalance and F gases, as well as chillers able to survive an increasingly more common temperature extremes. But now I'd like to hand over to James to provide some more detail on the acquisitions undertaken during the period.

Thanks, Stephen. Yes, moving on to our inorganic strategic development. In FY26, we made two earnings enhancing acquisitions, both of which in line with our key criteria. Firstly, seven thermal solutions which we acquired in June 2025 for £4.8 million. They've got 11 employees and are based in Dursley, Gloucestershire and have been positioned into our lab equipment division. Seven are expert designers and manufacturers of specialist furnace systems and environmental chambers. These systems are capable of going from almost absolute zero to over 3000 degrees C. Their focus is on advanced material testing and processing applications, specifically within highly technical and high value markets such as aerospace, semiconductors, and most recently in the nuclear space, as Steve mentioned earlier. They will remain autonomous as part of our decentralized model. Our second and most recent acquisition PRP Octoelectronics was completed in February 2026 for a total consideration of 9.3 million. They're based in Swindon with 33 employees and they're sitting within our industrial and scientific census division. PRP are specialists in the design and manufacture of custom high performance micro LED systems. and whilst they make LED components for optics, industrial printing and purification systems, their core focus is the supply of mission-critical components such as instrumentation, awnings panels and switches for civil and military avionic platforms, including the Eurofighter Typhoon F-16, F-22 and the Airbus A320. PRP will also be kept autonomous as part of our structure. Since joining the Group, the integration of both companies has already gone very well, with the leaders of each business settling in and already exploring synergies across all divisions within the Group. I shall now hand you over to Amitabh for our financial overview of the year. Thank you James. Afternoon everyone.

Looking at the financial highlights. SDI has had a good year. It was second half weighted as we expected at the Interims. This was due to the timing of deliveries on some large contracts. I'll talk about this in more detail later on. This drove this particularly strong organic revenue growth over the second half of the year. We saw over 7% growth due to acquisitions. The strategy that we have implemented over the last couple of years has driven organic revenue growth above 5% for the full year. Adjusted EBITDA improved to 14.1 million pounds, and adjusted operating profit grew to 11.6 million whilst net operating margins improved from 15 to 15.5%. We saw strong growth in adjusted profit before tax and hence adjusted dilated earnings per share. Cash generated by operations exceeded 10 million pounds once again The acquisition of PRP was made in the last quarter of the year. This increased net debt to £24 million at the period end. Turning to the income statement. The £4.7 million acquisition growth includes PRP and Seven Thermal, which were new acquisitions this year. Inspect vision revenues for the first half of this financial year and Collins Walker for the first 11 months represent the balance of the acquisition growth. Organic revenue growth was therefore 5.3% on a constant currency basis for the year. 6.7% in the second half alone, again on a constant currency basis. Organic revenue growth was 7.6% in the second half if you include currency effects. Gross profit margins increased to 66%. This is on materials only. On a light for light basis, gross margins improved from 64.9% to 65.7%. Pricing continues to be a key focus for the group. Our cost base increased this year for a number of reasons. We saw the impact of increased employers NI, minimum wage and apprenticeship levy, which increased operating costs. SDI also invested in additional management resources to support its organic strategy. Average debt was higher this year, but interest rates were lower. This meant that finance charges increased by 200k compared to last year. The tax rate on adjusted PVT was unchanged at 22.7%, which meant that the adjusted diluted EPS grew at a similar level to adjusted PVT. The next three slides provide a bit more detail on the financial performance of the three segments. We start with the Census Division. PRP added 1.3 million in revenues post acquisition. Excluding PRP, organic growth was an excellent 15.4%. This was driven by strong performances at Shell, Astels and Centec. Shell delivered most of a million pound smart meter system project in Q4 and Centec saw strong demand from its OEM customers for pH sensors and pH electrodes over the year. Astel saw growth from chemical dosing system revenues as well as spare sales. Peak had an excellent year, as Stephen mentioned, driven by demand from the glass industry. This segment increased its EBIT by 17% to 5.3 million, operating margins of 25.1% compared to 26.4% last year. The reduced margins reflect contract mix. Next, the Lab Equipment Division. 30 years for this segment. 7th Thermal joined the division early in the financial year and added £1.8 million in revenues. Organically, the segment grew by 4.8%. Safelab, Monmouth and LTE all had good years from a revenue perspective. The large government contract Stephen referred to was largely divided in Q4. Monmouth saw growth in clean room sales, and LTE's product range showed year-on-year improvement, while Synoptics continued to see a slower market. The segment increased its EBIT by 30% to 3.5 million. Then operating margins improved to 13% over seven thermal, providing a positive mix pattern. Next, the product division. Acquisition revenues become organic 12 months from the date of acquisition, and Sinspect Vision and Collins Walker contributed £1.5 million in non-organic revenues. The division saw largely flat revenues this financial year on an organic basis. Overall, there was a small organic decline of 0.5%. Attic had a very strong year, delivering the large professional astronomy contract Stephen referred to. Both Fraser and Grassy Hills were largely flat revenue-wise. Scientific Vacuum Systems saw a slower period of trading as it worked on one large program compared with two in a comparative period. As Stephen mentioned a second large contract worth 2.2 million pounds was won late in the financial year. The segment increased its EBIT by 23% to 6.1 million pounds. Then operating margins increased to 23% due to the excellent performance from Attic and Improved Margin and Overhead Management at Phrasin. Turning to cash. SDI generated a cash of 10.2 million pounds in FY26, which compares to 12.9 million pounds last year. FY25 was a very strong year for cash with the working capital at the end of that year at a very low level. For this year, working capital has increased by 3 million. Of this, trade debt has increased by £1.5 million, with a lot of activity in the last two months of the period. Debtor days remain low at 44, similar to last year end. Inventory has increased by £1 million. These were across most businesses, with the largest increases at Attic and Monmouth. Other debtors' direct credit has increased by a net £1.1 million. The largest component was £0.5 million relating to SVS. whose final cash flows on an ongoing long-term contract with a UK government customer will not be received until this financial year. This slide shows graphically the movements in net debt. £10.2 million in cash generated by operations is on the left-hand side of the graph. Now utilisation of that cash is illustrated on the right. We ended the year with £24 million of debt, excluding leases. This compares to £13.8 million at the beginning of the financial year. We renegotiated our back facility over the autumn for some improved terms. This provides £25 million in committed funding for another three years to November 2028, with a further two option years available. A further £15 million accordion option was available to SDI at HSBC's discretion. 6 million of the 15 million accordion was exercised in February to fund the acquisition of PRP, leaving 9 million of the accordion available at the end of the period. There was headroom of 4 million on the RCF at the year end. Our leverage at year end was 1.7 times net debt to EBITDA, driven by the acquisition of PRP late in the financial year. By the end of June 2026, gross borrowings had reduced to £26 million, meaning the RCF headroom had increased to £5 million. There was £0.7 million in outstanding deferred consideration at the year end, relating to PRP, and this was paid in May. Now I'd like to hand back to Stephen, who will take you through the outlook.

Thank you, Ali. Now looking forward to our next year. For the future our strategy remains consistent and focused on delivering growth both organically and inorganically. We will continue to leverage our expanded management bandwidth to drive operational excellence, promote cross-selling synergies and of course invest in R&D. We enter the new financial year with strong momentum following our 8% H2 organic growth and our acquisition pipeline remaining robust and actively managed. With our renewed credit facility, we have significant power and the capacity to execute in future opportunities. And finally, we expect to deliver FY27 performance in line with market expectations and remain confident that we will deliver sustainable, compounding and long term value to all of our stakeholders. Thank you.

That's great, thank you very much indeed for your presentation. I will now bring your cameras back up for the Q&A. Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that recording of this presentation along with a copy of the slides and the published Q&A can be accessed via our invested dashboard. Ami, at this point if I may hand over to you to chair the Q&A. Read out the questions where appropriate to do so and I'll pick up from you at the end. Thank you. Great, thank you.

So the first question that I've got is what do you know about this new shareholder in your register who's built up a 13% stake What do you know of this intention? I'll hand that one to you, Stephen.

Yeah, sure. OK. Whilst we can't control who buys our shares, of course, because we're a public company, we can confirm that we do have active engagement with McHale and of course, along with our major other shareholders. The good news is that he really understands our business model and he's confirmed that he is supportive of the direction and strategy of the business. He has given us some really valuable feedback and he does add quite a lot of value to the business. His background as well also brings value so he does seem to be a very supportive shareholder.

Okay, next one. Will you be looking for bigger companies to buy going forwards? Okay, I'll give that to you James.

So the intention long term of the foreseeable future is not to go bigger in terms of acquisition sizes. We're likely to do more quantities of the range that we've been focused on already, which is the one to one and a half million pound EBIT range. What you're likely to see in the coming years is that we will do less of the smaller sizes, which historically we've been looking at about half a million or so EBIT. So we suspect they will become a bit less frequent and they will be focused on bolt-ons rather than the autonomous ones, which is the £1 million plus EBIT.

Okay, now there's two questions on AI. First question is what's your view on AI and its potential impact to SDI? There's a second question on the same theme, which is how much of a threat to SDI is AI? The key add to industrial businesses from AI is cost reduction. and more output with less beam port. SGI small operating units means there is no scaling to be had. Thus is advantage larger competitiveness. Stephen, do you want to take this one?

Yeah, of course. AI is a very exciting topic and we can probably talk all day about that one. How does AI relate to SDI? So there's a couple of factors here to consider. First of all, in terms of a threat to AI, as AI to SDI, that's something which we do review on a very regular basis. The good news is that our model, being a largely manufacturing model, We do not see AI being a particular threat to us, where what we do is not easily replaceable by AI in any stretch. We also operate in very niche industries and we also supply very niche equipment as well, which again is not replaceable by AI. And we also feed that into our M&A strategy as well. So whenever we're looking at a business, it is actually one of our selection criteria is could is there a possibility of this being taken out or at least reduced by AI and really if the question is yes then we typically would factor that into the deal the other side really from an operational standpoint is something that again we we're very hot on and that is it's and I think we can clearly report that our portfolio companies are well ahead in terms of AI adoption especially where it provides a key technological advancement in their fields. A couple of businesses, InspectVision and Synoptics is integrated as a vital business tool into the products themselves, particularly InspectVision where it uses AI for for various code generation which which is really good and it has improved efficiency there quite quickly for example time the market of software updates has been really really powerful and really advantageous to us going forward at group level we do leverage AI tools probably more extensively than than what we did and and that's improving and we're looking at more formal AI integration possibilities as well than fine areas where we can prove efficiencies going forward. So we do need to be ahead of the curve. Are we quite there yet?

No, but we're very aware of it. Okay, the next viewer for me. Is the jump in receivable days due to acquisitions rather than existing customers paying slower? Okay, so the trade debtor days were 44 at the period end. In terms of absolute debtors, yes, the debtors level increased due to acquisitions, but in terms of debtor days, it was 44, which was the same at last year end. So existing customers are not paying us lower than we are collecting in line with what we've done before. If you look at it in terms of other debtors then as I mentioned on the presentation there is some working capital tied up with scientific vacuum systems which will be recovered in the first half of this year. It's just a routine cash flow at the end of a contract which is moved to the right and that's the other factor within receivables, John. Okay, next one's for me as well. Do you pay for all your acquisitions by debt? Well at the moment, yes we do. That's how we do. So the way we do things is we pay down the debt through our cash flows and then leverage up again to buy another business. And I guess that will be the business model going forward for now. I think we said that before and that will continue. So Neil, a quick question from the next one. Can you provide some more colour on the FOI guidance? Did I understand it correctly that Q1 started with 8% growth? I think the four year guidance you can find on the press release for 26 and for 27 as it was coming in today. So I'll point you towards there instead of trying to quote the numbers down. But in terms of the last part of the question, which was, did Q1 start with 8% growth? No, no, that's not what the presentation said. We haven't finished Q1 yet. Q1 finishes at the end of this week. It was the second half of FY26, which showed in absolute terms 8% organic growth. So yes, we did have organic growth, but it was in the second half of the last financial year, not Q1.

We can confirm that the start of FY27 has started strongly. As Amit said, we haven't closed Q1 yet, but it is looking pretty strong at the moment, both from an order book standpoint as well as output.

So we are quite optimistic about the year going forward. Do we have any concern over our new debt levels against our cash levels? I think what that means is that in terms of our leverage, so we're at 1.7 times in that debt to adjusted EBITDA, the limits 2.5 times. So we've got plenty of bedroom that started to come down and indeed has come down since the year end and will continue to come down as we generate more cash. So there's no concern here. We're cash generative and that level and we will continue to reduce our debt as the year goes on. As we said, when we made the acquisition for PRP, which is where they got the additional debt came from. It sounds as though H2 benefited from certain large contracts at certain businesses. How confident are you that the recent momentum can be sustained? Well, those contracts and we knew about right at the beginning of the financial year and we knew there would be second half wasted obviously we have a budget for the current financial year we don't quite have that profile this year but the first half we're looking at a slightly better first half second half split than last year so you should so we should want to see some more organic growth again at the first half but we are confident I think that's what we said in terms of the guidance in terms of Stephen's

The good news as well is that the first half of this year is not necessarily supported or prompted by significantly large contracts. So we've got a much smoother profile going into this half, which is why the confidence and which is why the more even H1-H2 split that we didn't have last year.

That's great Stephen. Ami, James, if I may just jump back in there as you have addressed all those questions from investors today, so thank you very much indeed. But Stephen, before I redirect investors to provide you with their feedback, which I know is particularly important to yourself and the company, could I please just ask you for a few closing comments?

Yes, of course. I'd just like to thank everyone for joining and taking the time to listen to us and to the presentation and all the good questions. The questions were good and very relevant. I'd also like to thank all of our stakeholders for the continued support and I look forward to keeping you fully communicated to and the NILP as we continue our journey. So thank you very much.

Fantastic, well look guys thank you for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback which will help the company better understand your views and expectations. On behalf of the management team we would like to thank you for attending today's presentation and good afternoon to