SDI Group Regulatory News (SDI)

25 Jan 2010 07:00



25 January 2010 

Scientific Digital Imaging plc

("SDI" or the "Group")

(AIM: SDI)

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO 31 OCTOBER 2009

The Board of Scientific Digital Imaging plc, the AIM quoted group focused on the needs of the scientific community, is pleased to announce its unaudited interim results for the six months ended 31 October 2009.

Highlights

Sales increased by 7.0% to £3.42m (2008: £3.19m)

Gross margins improved to 57.8% (2008: 54.3%)

Synergies from earlier acquisitions became more evident

Operating profit £75k (2008: £270k, which benefited from a currency exchange gain of £110k)

Basic earnings per share 0.69p (2008: 1.37p)

Net cash position £163k 

Harry Tee CBE, Chairman of SDI, commented:

"Overall, we believe that the Group has strengthened its market position over the past six months and that its new products and initiatives provide considerable potential for profitable growth.

"We continue to seek further complementary acquisition targets for the Group."

--END-

Enquiries

Scientific Digital Imaging plc  

01223 727144

Harry Tee CBE, Chairman

Phil Atkin, CEO

www.scientificdigitalimaging.com 

Grant Thornton Corporate Finance (Nominated Adviser)

020 7383 5100

Philip Secrett

Colin Aaronson

Astaire Securities plc

020 7448 4400 

Katie Shelton  

Bishopsgate Communications

020 7562 3350

Will Tindall

Gemma O'Hara

sdi@bishopsgatecommunications.com

Chairman's statement

Unaudited for the six months ended 31 October 2009

I am pleased to report that the Group showed a sales increase of 7.0% to £3.42m (2008: £3.19m) in the six months to 31 October 2009, despite the gloomy economic environment. Operating profit reduced to £75k (2008: £270k); the reduction was a consequence of currency exchange movements between the periods of £142k and increased investment in the Group's future. Basic earnings per share were 0.69p and fully diluted 0.60p (2008: 1.37p in both cases). The Group's net cash position decreased by £176k to £163k over the period. This reduction included a final consideration payment of £23k for the completion of the acquisition of Atik (formerly known as Artemis and Perseu), whilst working capital absorbed £96k.

Trading

Synoptics Limited ("Synoptics"), the Group's primary subsidiary, saw a small increase in its contribution margin despite a slight decrease in sales, whereas Atik demonstrated good improvements in both margin and turnover and provided a solid contribution to Group results.

Gross margin percentages improved by 3.5% to 57.8% (2008: 54.3%) as a result of product mix changes and the inclusion of Atik - a key supplier of Synoptics - within the Group, together with more advantageous exchange rates.

Administrative expenses increased to £1.87m (2008: £1.53m). A significant proportion of this rise is attributable to the administrative expenses of Atik and the ongoing listing costs of AIM; these were incurred over the full reporting period whereas the comparable 2008 figure only includes these expenses over the last part of that period. The Group also accelerated investment at Atik, increasing the number of employees from 3 to 7 since acquisition, in order to strengthen its sales channels and development capability. Costs denominated in US dollars also rose by approximately £60k as the result of changes in the exchange rate. 

The Synoptics business in the US continued to grow. In the Syngene division, sales of higher-value systems have increased; this is a result of an investment in key developments in this area that deliver both greater performance and improved ease of use. The availability of stimulus funds has also provided some boost to sales in the US.

Atik has recently invested in a campaign to grow sales in the important US market, using the facilities of Synoptics Inc. in Maryland to streamline operations. It has begun work on its own image processing package, "Dawn", that will further establish Atik as a key company in the amateur astronomy market. "Dawn" uses the facilities of the image processing software toolkit developed over many years by Synoptics (a key part of its intellectual property) to provide facilities for the post-processing of astronomical images, presented via an attractive and innovative user interface.

The Synbiosis (microbiology) division of Synoptics launched a major new product, ProtoCOL 2, following a considerable investment in optical, mechanical and especially software technology. ProtoCOL 2 is a complete redesign of the previous successful colony counting instrument. Not only does the instrument provide high performance levels, but every effort has been dedicated to making it easy to use for both the end customer and the distributors that sell it. Market feedback has so far been very encouraging and sales are satisfactory.

Outlook

The benefits we anticipated from the consolidation of key suppliers into the Group have begun to be realised. Not only has this improved margins, but technical synergies have been achieved. The development of ProtoCOL 2 is expected to strengthen our standing in the microbiology market place. We anticipate that this innovative new product, along with improvements to the high-value products in the Syngene range and both new products and new sales channels at Atik, will result in further growth.

We are pleased that our sales have proved robust through turbulent economic periods. Our experiences suggest that the funding of long-term research and development in our key markets has so far remained insulated from the general fluctuations of the economy. 

Overall, the Board believes the Group has strengthened its market position over recent periods and its new products and initiatives will contribute to a stronger second half. The Board now anticipates that market expectations for the full year will be exceeded. The Group continues to work on implementing its strategy to grow through acquisition and is actively seeking complementary businesses. 

consolidated Income statement

Unaudited for the six months ended 31 October 2009

consolidated statement of comprehensive income

Unaudited for the six months ended 31 October 2009

consolidated balance sheet 

Unaudited at 31 October 2009

consolidated statement of CASH FLOWs

Unaudited for the six months ended 31 October 2009

consolidated statement of changes in equity

Unaudited as at 31 October 2009

notes to the interim financial statements 

Unaudited as at 31 October 2009

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

reporting entity

Scientific Digital Imaging plc, 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 2009 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 2009. These interim financial statements have been prepared in accordance with the accounting policies expected to be followed for the year ending 30 April 2010, which are based on the recognition and measurement principles of IFRS as adopted by the European Union. The financial information for the year ended 30 April 2009 is based upon the audited statutory accounts for that year.

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 information was approved by The Board of Directors on 22nd January 2010.

The financial information set out in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The figures for the year ended 30 April 2009 have been extracted 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 to 31 October 2009 and for the six months to 31 October 2008 is unaudited.

principal accounting policies

The principal accounting policies adopted are consistent with those of the annual financial statements for the year ended 30 April 2009, except for the adoption of IAS 1 Presentation of Financial Statements (revised 2007) and IFRS 8 Operating Segments, and are those expected to be applied for the year ended 30 April 2010.

The adoption of IAS 1 (revised 2007) does not affect the financial position or the profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged. IAS 1 (revised 2007) affects the presentation of owner changes in equity. 

The adoption of IFRS 8 has not changed the segments which are disclosed. Under IFRS 8 the accounting policy for identifying segments is based on the internal management reporting information that is regularly reviewed by the chief operating decision maker.

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

1 TaxATION

The income tax expense recognised in the period is less than the effective rate of tax for the group of 28% due to the availability of an additional deduction in the period for research and development and the impact of initial recognition of tax losses brought forward across the group.

2 Earnings per share

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

The calculation of diluted earnings per share is based on the profits attributable to the shareholders of Scientific Digital Imaging plc divided by the weighted average number of shares in issue during the year, as adjusted for dilutive share options, dilutive deferred consideration and shares held by the Synoptics Employee Benefit Trust.

The reconciliation of average number of ordinary shares used for basic and diluted earnings is as below:

As at the 31 October 2009 & 2008 the company had outstanding exercisable share options and warrants. Under IAS 33 the dilutive earnings per share is calculated assuming that all such instruments are exercised in full. In October 2008 the exercise price for the options and warrants was the same or above the average market share price for the company so the share options and warrants were considered to be non dilutive. 

The conversion of all loan stock would result in an increase in average weighted shares of 379,000. There would be a corresponding increase in adjusted earnings due to the interest accruing thereon. The net effect is an enhancement of earnings per share.

3 Borrowings