SDI Group Regulatory News (SDI)

17 January 2011

Scientific Digital Imaging plc

("SDI" or the "Group")

(AIM: SDI)

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO 31 OCTOBER 2010

The Board of Scientific Digital Imaging plc, the AIM quoted group focused on the application of digital imaging technology to the needs of the scientific community, is pleased to announce its unaudited interim results for the six months ended 31 October 2010.

Highlights

·; Sales increased by 2.5% to £3.50m (2009: £3.42m)

·; Operating loss £149k (2009: profit £75k)

·; Basic loss per share 1.11p (2009: earnings 0.69p)

·; Net cash position £224k

·; Investment in people will bring future benefits

·; New product lines within Synoptics and Atik

Harry Tee CBE, Chairman of SDI, commented:

"It has been a period of good product news but mixed financial performance. Our expectations of a stable market were proven relatively valid; however the economic circumstances have resulted in an unexpected shift in product mix, resulting in an increase in the proportion of lower margin instruments and consequently a reduction in gross percentage margin.

The Board anticipates that new products released during the first half will contribute to a substantially stronger second half and that the Group's strategy will result in good medium-term growth and in an improvement in our margins over the balance of the financial year, particularly given the strengthening of the supply for some of the growth products.

 Our strategy of growth through acquisition of complementary businesses remains unchanged. We continue to work hard at finding suitable acquisition opportunities and are anticipating completing at least one acquisition in 2011."

--END-

Enquiries

Scientific Digital Imaging plc 01223 727144

Harry Tee CBE, Chairman

Phil Atkin, CEO

www.scientificdigitalimaging.com 

FinnCap Limited 020 7600 1658

Sarah Wharry/Charlotte Stranner

Bishopsgate Communications 020 7562 3350

Duncan McCormick/Natalie Quinn/Deepali Schneider

sdi@bishopsgatecommunications.com 

CHAIRMAN'S STATEMENT

It has been a period of good product news but mixed financial performance. Our expectations of a stable market were proven relatively valid, however the economic circumstances have resulted in an unexpected shift in product mix, resulting in an increase in the proportion of lower margin instruments and consequently a reduction in gross percentage margin.

Revenue increased 2.5% in the six months to 31 October 2010 (£3,502k, relative to revenue £3,418k for the six months to 31 October 2009). However as a consequence of the change in product mix, the gross profit was effectively unchanged (£1,978k, with comparative for 6 months to 31 October 2009: £1,977k).

Administrative expenses rose to £2,117k (2009: £1,870k), mainly due to earlier increases in Atik staff being present throughout the period and to increased central overhead, including the appointment of a Group CFO - something we see as a vital investment for the future - and preliminary acquisition costs.

The overall effect of this reduced gross margin and increased overhead has been an operating loss for the period of £149k (2009: £75k profit).

Basic and fully diluted loss per share were both 1.11p (2009: earnings 0.69p and 0.60p respectively).

The Group's cash position decreased by £538k to £224k over the period, mainly due to the operating loss, stock fluctuations and commission payments all of which are expected to be reduced over the second half of the financial year. The Group has an invoice discounting facility of up to £500k available to finance its operations which it is not currently utilising.

Major changes to the Syngene product line were introduced during the period. The G:Box range of instruments was re-engineered with a new range of cameras (principally in the Atik range) and new software known as GeneSys. GeneSys was launched to a well-attended international dealer meeting at the end of September and represents a step change in the design of image capture software for DNA gel documentation systems. Using such systems has become complex, requiring an understanding of multiple fluorescent dyes, multiple lighting options, computer-controlled lenses and filters, and of course a highly sophisticated camera. GeneSys, however, is completely application-centric and is capable of controlling the entire system to achieve optimal results; the user simply has to specify what is being imaged. With an intuitive, touch-screen interface, this software represents a major breakthrough and was very well received by the dealers.

A new camera introduced by Atik was also very well received by the market and the order book grew rapidly. Unfortunately initial problems with the design meant that production of the camera was time-consuming in the early months and a number of the first shipped units proved unreliable in the field. It was necessary to halt production and decline further orders until the problems were resolved; fortunately very few orders were lost as a consequence. The problems have now been fully resolved and production has recommenced on an improved basis.

Increased demand for Atik cameras in both the astronomy and bio-imaging markets resulted in the need to enhance the production facilities in Lisbon through the installation of specialised equipment and the recruitment of additional personnel, and to the opening of an additional UK production facility.

Atik's presence in the US market has led to increased recognition of the brand and this has enabled a change in approach: the cameras are now sold through US distributors, leading to a significant increase in potential future sales.

Throughout the period we have continued to examine a number of potential acquisition targets, following our stated strategy of acquiring digital imaging companies in the life sciences sector and in other scientific markets, as well as seeking to generate organic growth. Sadly, a number of the acquisition targets we have pursued have not come to fruition for a variety of reasons.

Outlook

The markets addressed by the Group remain mainly stable, although we have suffered from some unexpected short-term fluctuations in demand and a change in product mix.

The Board anticipates that new products released during the first half will contribute to a substantially stronger second half and that the Group's strategy will result in good medium-term growth and in an improvement in our margins over the balance of the financial year, particularly given the strengthening of the supply for some of the growth products.

However the unexpected shift in product mix during the first half, together with the associated reduction in gross margin, and preliminary acquisition costs during the first half, mean that the Board continues to believe that the post tax profit for the full year will be below original expectations (as stated in our trading update of 10 December 2010).

Our strategy of growth through acquisition of complementary businesses remains unchanged. We continue to work hard at finding suitable acquisition opportunities and are anticipating completing at least one acquisition in 2011.

Harry Tee CBE, Chairman 17th January 2011

Scientific digital imaging plc

Interim Financial Statements

FOR 6 months ENDED

31 october 2010

CONSOLIDATED INCOME STATEMENT

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED BALANCE SHEET

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE INTERIM FINANCIAL STATEMENTS

6 months to 31 October 2010 (unaudited)

The accompanying accounting policies and notes form an integral part of these interim financial statements.

reporting entity

Scientific Digital Imaging Plc (the "Company"), a public limited company, is the Group's ultimate parent. It is registered in England and Wales. The consolidated interim financial statements of the Company for the period ended 31 October 2010 comprise the Company and its subsidiaries (together referred to as the "Group").

Basis of Preparation

The unaudited consolidated interim financial statements are for the six months ended 31 October 2010. These interim financial statements have been prepared in accordance with the accounting policies expected to be followed for the year ending 30 April 2011, which are based on the recognition and measurement principles of IFRS as adopted by the European Union.

The financial statements have been prepared on the historical cost basis. 

The consolidated interim financial statements are presented in British pounds (£), which is also the functional currency of the ultimate parent company.

The consolidated interim financial statements were approved by the Board of Directors on 13th January 2011.

The financial information set out in these interim financial statements does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The figures for the year ended 30 April 2010 have been extracted without adjustment from the IFRS Statutory Financial Statements of Scientific Digital Imaging Plc which have been filed with the Registrar of Companies. The auditor's report on those financial statements is unqualified. The financial information for the six months ended 31 October 2009, which is unaudited, has been extracted without adjustment from the interim financial statements for that period which were published by the Company on 25 January 2010. The financial information for the six months ended 31 October 2010 is unaudited.

1 principal accounting policies

The principal accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 April 2010.

 The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these interim financial statements.

2 TaxATION

3 (LOSS)/Earnings per share

The calculation of the basic (loss)/earnings per share is based on the (loss)/profit attributable to the shareholders of Scientific Digital Imaging Plc divided by the weighted average number of shares in issue during the period, excluding shares held by the Synoptics Employee Benefit Trust. All (loss)/earnings per share calculations relate to continuing operations of the Group.

The calculation of diluted (loss)/earnings per share is based on the (loss)/profit attributable to the shareholders of Scientific Digital Imaging Plc divided by the weighted average number of shares in issue during the period, as adjusted for any dilutive share options and warrants, dilutive deferred consideration and shares held by the Synoptics Employee Benefit Trust. 

As at 31 October 2010 and 2009 and 30 April 2010, the Company had outstanding exercisable share options and warrants. Under IAS 33 the diluted earnings per share is calculated assuming that all such instruments are exercised in full. However as the existing options and warrants are either "out of the money" or their exercise would reduce the loss per share for the period of 6 months to 31 October 2010, the diluted loss per share for thatperiod is the same as the undiluted loss per share.

The reconciliation of average number of ordinary shares used for basic and diluted (loss)/earnings per share is as below:

4 Borrowings

The Group utilises short-term facilities to finance its operations. The Group has one principal banker with an invoice discounting facility of up to £500k. At the end of the period the Group had cash on the balance sheet therefore the facility was not utilised.