SDI Group Final Results: Revenue Rises 12.6%, but Acquisition Spending Lifts Net Debt

Strong growth from both the existing portfolio and acquisitions

SDI Group PLC has reported a strong set of final results for the year ended 30 April 2026, with revenue, profit and earnings per share all moving higher.

The specialist industrial and scientific products group generated revenue of £74.5 million, up 12.6% from £66.2 million. Importantly, the improvement was not solely bought through acquisitions. Organic revenue increased by 5.5%, or 5.3% on a constant currency basis, while acquisitions contributed another 7.1%.

Momentum also strengthened as the year progressed. Second-half organic growth reached 7.6% in absolute terms and 6.7% at constant currency, giving management confidence as SDI moves into FY27.

The full figures are available in the original company announcement.

SDI Group's key FY26 figures

Metric	FY26	FY25	Change
Revenue	£74.5 million	£66.2 million	12.6%
Organic revenue growth	5.5%	Not disclosed	-
Gross margin on materials only	66.0%	64.9%	1.1 percentage points
Adjusted operating profit	£11.6 million	£10.0 million	16.1%
Reported operating profit	£8.2 million	£6.9 million	18.0%
Adjusted profit before tax	£9.9 million	£8.5 million	16.8%
Reported profit before tax	£6.5 million	£5.5 million	19.7%
Adjusted diluted EPS	7.17p	6.18p	16.0%
Reported diluted EPS	4.59p	3.81p	20.5%
Cash generated from operations	£10.2 million	£12.9 million	Lower
Net debt	£24.0 million	£13.8 million	Higher

Adjusted figures exclude share-based payments, acquisition costs, reorganisation costs and the amortisation of acquired intangible assets. These measures can help show underlying trading, but investors should also keep an eye on the reported numbers and cash flow.

The good news is that both versions improved. Reported operating profit rose by 18.0%, slightly faster than revenue, while the adjusted operating margin increased from 15.0% to 15.5%.

Gross margin on materials also improved from 64.9% to 66.0%. SDI attributed the adjusted margin progress to its mix of higher-margin acquisitions, improved profitability at Atik and better margins and cost control at Fraser.

All three divisions delivered reported revenue growth

The strongest top-line performance came from Industrial & Scientific Sensors, where revenue increased by 22.9% to £20.9 million. Excluding the contribution from newly acquired PRP Optoelectronics, organic growth was 15.4%.

Chell expanded its Formula One presence to supply 10 of the 11 teams and worked on aerospace projects including the Tempest aircraft programme. Sentek secured a £2.1 million custom sensor contract, while PRP added exposure to avionics and defence.

Laboratory Equipment revenue rose by 12.4% to £27.0 million. Adjusting for the Severn Thermal Solutions acquisition, organic growth was 4.8%. Divisional operating margin improved from 11.3% to 13.0%, supported by contract wins and better trading at businesses including Safelab and Monmouth.

Industrial & Scientific Products grew revenue by 5.6% to £26.6 million, although organic revenue slipped by 0.5% after adjusting for InspecVision and Collins Walker. Atik performed strongly as it executed a $4 million professional astronomy contract, but SVS had a slower period and Applied Thermal Control continued to face a chiller market slowdown linked to regulatory changes affecting fluorinated gases.

Despite the broadly flat organic performance, the Products division's margin improved from 19.8% to 23.0%. That suggests the quality of earnings moved in the right direction even where sales growth was less convincing.

Acquisitions strengthen the portfolio, but debt is the trade-off

SDI completed two acquisitions during FY26.

Severn Thermal Solutions was acquired in June 2025 for net consideration of £4.8 million. It manufactures high-temperature furnaces and environmental chambers for customers in sectors including nuclear, semiconductors and aerospace.

PRP Optoelectronics joined in February 2026. Its net consideration was £8.6 million after retaining £0.7 million for working capital. PRP designs and manufactures high-performance microLED products for avionics, defence and industrial applications.

Both businesses fit SDI's stated strategy of acquiring profitable, cash-generative manufacturers in specialist niches. Management described the acquisition pipeline as strong and renewed its borrowing arrangements to support further deals.

However, the balance-sheet effect deserves attention. Net debt, excluding leases and deferred consideration, increased from £13.8 million to £24.0 million. The group had drawn £27.0 million from its revolving credit facility at year-end, leaving £4.0 million of headroom.

A further £9.0 million accordion option remained available, but access is subject to HSBC's discretion. That distinction matters because it is not the same as committed headroom.

Cash generation was weaker than profit growth

Cash generated from operations fell from £12.9 million to £10.2 million, despite the stronger profit result. Free cash flow before acquisition consideration but after lease payments declined from £6.9 million to £3.2 million.

The main reason was a £3.1 million working-capital outflow. Trade debtors increased following high activity during March and April, while inventories rose by £1.0 million across several businesses.

Some of this may unwind in FY27. For example, £0.5 million connected to an ongoing SVS contract with a UK government customer is expected to be received during the year. Even so, cash conversion will be an important figure to watch, particularly if SDI continues acquiring businesses.

The board has again decided not to pay a dividend, preferring to retain capital for operations and acquisitions. That approach is consistent with a buy-and-build strategy, but it means shareholders remain dependent on business growth rather than receiving an income return.

Cross-group collaboration is becoming more visible

One encouraging operational theme was the evidence of collaboration between portfolio companies.

Monmouth worked with Fraser to develop static-control technology for a powder containment cabinet, while Severn sourced chillers from Applied Thermal Control. SDI has also invested in modern enterprise resource planning systems, research and development, group marketing and management capacity.

These initiatives matter because a decentralised acquisition group needs to produce more than a collection of separate businesses. Shared expertise, procurement and market access could help generate organic growth without relying entirely on the next deal.

SDI now operates 17 established businesses and exports an estimated 70% of its specialist products to international markets.

FY27 expectations set the next benchmark

Management expects FY27 performance to be in line with current market expectations. The averages cited by SDI are:

FY27 market expectation	Forecast
Revenue	£82.9 million
Adjusted operating profit	£13.1 million
Adjusted profit before tax	£11.2 million

The FY26 results leave SDI entering the new year with stronger second-half organic momentum, improved margins and contributions still to come from recent acquisitions.

The balancing factors are higher debt, weaker cash generation and uneven organic performance across the divisions. For investors, the key test in FY27 will be whether SDI can convert its enlarged platform and contract pipeline into cash while maintaining enough financial flexibility for its acquisition strategy.