Afriag Global Regulatory News (AFRI)

3D DIAGNOSTIC IMAGING PLC

("3D" or the "Company")

(AIM ticker 3DD)

Unaudited interim results

for the six months ended 31 December 2011

3D, which owns the protected rights to a technology platform with a number of significant potential commercial applications, today announces its interim results for the six month period ended 31 December 2011.

Highlights

·; £1.41 million (before costs) of additional equity capital successfully raised in October 2011

·; Cost base tightly managed

·; Significant enhancement in product functionality with all units in the field being successfully upgraded

·; CarieScan PRO gaining industry recognition

·; £1.07 million of cash at period end

·; Early signs of an improvement in sales in 2012

David Snow, Interim Non-Executive Chairman of 3D Diagnostic Imaging said:

"This has been a period of mixed fortunes for the Company with a number of major achievements. Whilst we were disappointed with the level of sales traction we achieved in the six months to 31 December 2011, we now see some early signs of an improvement in trading as a result of the initiatives we have subsequently put in place. The Board continues to review the Company's strategy and also consider potential ways to further strengthen the balance sheet."

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Chairman's Half Year Statement

This is my first report to shareholders of the Company. I joined the Board as a non-executive director in December 2011. In February 2012 James Noble stepped down from the role of non-executive chairman as a direct consequence of a significant expansion in the level of activity within both of the companies where he serves as executive chairman, and which comprise his principal business interests. I then agreed to step into the role of non-executive chairman on a temporary basis until such time as a suitable replacement can be recruited. In this capacity I am pleased to report on the six month period to 31 December 2011.

This has been a period of mixed fortunes for the Company with a number of major achievements and some significant operational frustrations.

Amongst the achievements were: (i) the successful raising of £1.41 million (before costs) of additional equity; (ii) further cost reduction through, inter alia, the transfer of control of the Company from the Isle of Man to Dundee; (iii) the release of a favourable product report by a highly influential dental industry product reviewer; (iv) a significant enhancement in product functionality with all units in the field being successfully upgraded and; (v) the receipt of a number of complimentary plaudits from Key Opinion Leaders in the dental industry.

The CR Foundation ("CR") is considered to be one of the most influential product reviewers in the USA dental industry. In September 2011 CR released a report summarising the findings from its extensive testing and review of new diagnostic equipment available in the USA. The CR report accorded the CarieScan PRO ('PRO') a number of 'Excellents' in its assessment of the product. Of all the products reviewed in the report the PRO was the only product to receive an 'Excellent' in any category and concluded it 'Performed better than all previous products in rigorous trials'.

Recent plaudits received from Key Opinion Leaders have included the following.

"If dentists want the best for their patients, then they should all buy a CarieScan PRO ™. I do believe that this is the best product out there."

PROFESSOR EDWARD LYNCH PhD, Lond, MA, BDentSc, TCD, FDSRCSEd, FADFE, FDSRCSLondHead of Dentistry, University of Warwick, United Kingdom

"What sets the CarieScan PRO ™ apart from other units is its improved sensitivity and specificity with an unmatched accuracy. This high degree of accuracy means fewer false positives, giving me more confidence in my diagnosis."

DR MICHAEL MIYASAKI DDS Lecturer, Founder of Principle-Based Dentistry, Consultant , USA

"I can confidently tell you that among the 11 devices we have in our caries detection clinic, CarieScan PRO™ is the most reliable and accurate device for detection and monitoring of initial caries lesion on all surfaces." 

PROFESSOR BENNETT T AMAECHI BDS, MS (SATX, USA), PhD, FADIAssociate Professor and Director or Cariology, University of Texas Health Science Centre atSan Antonio, USA

In October 2011 the Company successfully raised £1.41 million of additional equity finance (before costs) through the issue of 70,500,000 new ordinary shares in 3D at a price of 2 pence per share with new and existing institutional investors (including certain of the directors of 3D).

In December 2011 a significant enhancement of the CarieScan PRO's functionality was completed, with a measurement now taking less than one second to complete (previously five seconds), with the potential for the most common type of user error now engineered out of the product and with a much easier to understand read out incorporated. By the end of February 2011 virtually all of the products in the field had been fully upgraded.

What has proved frustrating has been the Company's difficulties in achieving any meaningful level of sales traction in the period under review. This in part can be attributed to the high levels of stock held by certain distributors at the beginning of the period, and the negative impact of the manufacturing defect that was experienced and fully resolved in the earlier part of the calendar year. The general economic uncertainty and the Company's reliance on third party distribution partners, a number of whom have not performed as we had hoped, have also had an impact and contributed to the disappointing sales performance in the period. In response to various initiatives implemented by the Company in the fourth quarter of 2011 some early signs of improvement have been seen in the first quarter of 2012. The Company's trading performance has inevitably had an adverse impact on the Company's cash resources and as a result the Board is currently considering potential ways in which to strengthen the Company's balance sheet.

The Board is taking active steps to explore the possibility of there being a suitable entity, with adequate resources and an existing international distribution infrastructure, with whom to partner in the dental sector. Similarly, active steps are being taken to identify a suitable entity with whom to partner in the development of the opportunity which the Company's technology platform provides in the osteoporosis sector. I look forward to reporting on further developments with these initiatives in due course.

The financial performance of the business during the period under review and its position at the end of the period can be summarised as follows. Turnover for the six months ended 31 December 2011 was £68k (six months ended 31 December 2010: £566k). The loss before tax amounted to £987k (six months ended 31 December 2010: £981k). Whilst the level of revenues in the period under review is lower than in the comparative period in the previous year (during which the initial stocking sale was made to Patterson Dental), the pre-tax loss has been contained at around the same level. This is a reflection of the cost cutting measures that have been successfully implemented by management. The reported level of gross profit in the period under review has dropped to 40% (six months to 31 December 2010: 72%). However, this has been adversely impacted by certain one off costs associated with product upgrades and stock reconciliations and is thus not a true reflection of the profitability of the product range. Net cash as at 31 December 2011 was £1.07 million (31 December 2010 cash of £2.01 million).

In response to the various obstacles encountered during 2011, the business revised its marketing and sales approach in the fourth quarter, effectively resetting the business' commercial activity. This approach, including the training of the majority of the US sales force in January 2012, is now beginning to bear fruit. Whilst still at low volumes the level of initial enquiries, qualified sales leads and in-market sales by distributors to dentists are all growing, which is encouraging. I look forward to reporting on further progress in due course.

David Snow

Interim Non-Executive Chairman

21 March 2012

Group Income Statement (unaudited)

for the six months ended 31 December 2011

All of the revenues and loss above is derived from continuing operations.

There is no other income for this period, and therefore no separate statement of comprehensive income has been presented.

Group Statement of Changes in Equity (unaudited)

for the six months ended 31 December 2011

Group Statement of Financial Position (unaudited)

At 31 December 2011

Group Statement of Cash Flows (unaudited)

For the six months ended 31 December 2011

Notes to the Interim Financial Information (unaudited)

1. General Information

The condensed financial information for the six months to 31 December 2011 and 31 December 2010 does not constitute statutory accounts for the purposes of Section 434 of the Companies Act 2006 and has not been audited or reviewed. No statutory accounts for the period have been delivered to the Registrar of Companies. This half-yearly financial report constitutes a dissemination announcement in accordance with Section 6.3 of the Disclosure and Transparency Rules.

The condensed financial information in respect of the year ended 30 June 2011 has been produced using extracts from the statutory accounts for this period. Consequently, this does not constitute the statutory information (as defined in section 434 of the Companies Act 2006) for the year ended 30 June 2011, which was audited. The statutory accounts for this period have been filed with the Registrar of Companies. The auditors' report was unqualified and did not contain a statement under Sections 498 (2) or 498 (3) of the Companies Act 2006.

The Interim Report was approved by the Directors on 20th March 2012 and will be available shortly on the Company's website at www.3ddiagnosticimaging.com.

2. Accounting Policies

Basis of preparation

The interim financial information has been prepared on the historical cost basis.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement. This statement also includes a summary of the Group's financial position and its cash flows.

Basis of accounting

The Group's consolidated financial statements for the year ended 30 June 2011 were prepared in accordance with International Financial Reporting Standards (IFRSs). The half-yearly report for the period ended 31 December 2011 has been prepared in accordance with International Accounting Standards ("IAS") 34 "Interim Financial Reporting".

3. Tax

No deferred tax asset has been recognised in respect of tax losses due to the uncertainty of future profit streams in the UK. 

4. Loss Per Share and Dividends

No dividends have been paid during the 6 month periods ended 31 December 2011 or 31 December 2010.

IAS 33 "Earnings per share" requires presentation of diluted earnings / (loss) per share when a company could be called upon to issue shares that would decrease profit or increase loss per share. For a loss making company with outstanding share options, loss per share would only be increased by the exercise of out of money options. Since it seems appropriate to assume that option holders would not exercise out of money options, no adjustment has been made to calculate the diluted loss per share on out of money share options.

Basic and diluted loss per share are calculated on the loss of the Group attributable to equity holders of the parent. 

5. Share Capital

The Company has one class of ordinary shares with a par value of 0.1p and which carry no right to fixed income.

6. Notes to the cash Flow Statement

7. Share Based Payments

The Group issues share-based benefits to employees. These share-based payments have been measured at their fair value at the date of grant and the fair value of expected shares is being expensed to the Income Statement on a straight-line basis over the vesting period. Fair value has been measured using the Black Scholes model and adjusted to reflect the most likely share vesting and exercise pattern. The impact on the accounting periods has been:

The cumulative provision for share-based payments of £103,271 (31 December 2010: £52,910) is shown as a reserve in the Group Statement of Financial Position.

8. Subsequent events

There were no significant events after the balance sheet date.