SDI LIMITED — AGM Information 2018

Nov 15, 2018

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FY18 AGM November 16, 2018 Sage Hotel, Ringwood

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Chairman’s Address

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CEO’s Address

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FINANCIAL PERFORMANCE

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FY18 HIGHLIGHTS

• NPAT up 1.5% to $5.7m

• Strong second half result with 2H18 up 27% on pcp

• Sales increased 0.5% to $74.5m with Nonamalgam sales rising 8.6% and offset by Amalgam sales down 12.9%

• Aesthetic sales up 9.3% in local currency (up 10.5% in AUD)

• Product margins increased by 1.1% to 61.1%, due to product and market sales mix, and Australian manufacturing efficiencies

• Full year fully franked dividends of 2.5 cents up 8.7%

• Debt reduction of $1.9m

• FDA registration approval granted to market Riva Star in the USA as a dental desensitiser

• Health Canada approval to market Riva Star as an anticaries agent

Sales v EBITDA

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74.1 74.1 74.5
68.7
65.3
15.4
12.3 12.4 12.1
10.8
2014 2015 2016 2017 2018
Sales in AUD ($m) EBITDA ($m)
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DIVIDENDS GROWTH AND NO DEBT

Net Debt & Free Cashflow

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7.2
6.4
4.7 4.4 4.0
3.1
1.7
2.1
2.6
-0.3
-1.7
-6.0
2013 2014 2015 2016 2017 2018
Net Debt ($m) Free Cashflow ($m)
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EPS & DPS

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6.4
5.5
5.2
4.7 4.8
4.0
2.5
2.3
2.0
1.4
0.7
0.5
2013 2014 2015 2016 2017 2018
EPS (cents) DPS (cents)
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• Net cash position with strong free cashflow

• Increased dividend and payout ratio reflective of balance sheet strength and the board’s confidence

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NO LONGER AN AMALGAM COMPANY

• Shifting industry trends identified more than 20 years ago

• Invested heavily in Research and Development

• Non-amalgam products, Whitening and Aesthetics, account for nearly 75% of all sales with CAGR 11.7%

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Non-Amalgam v Amalgam Sales ($m)
80
Total Sales (CAGR 5.5%)
70
Non-Amalgam (CAGR 11.7%)
60
Amalgam (CAGR -0.8%)
50 Inflection point
40
30
20
10
0
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18
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RESEARCH, INNOVATION, RESULTS

  - Focused R+D teams collaborating closely with researchers, universities and innovation centres globally

• Concentrating on categories that deliver high sales margins

• 4 new products to be launched at the International Dental Show (IDS) – March 2019

• Building on SDI’s world-leading technical expertise, particularly in glass ionomers and tooth whitening

• 1 – 2 new products per year to drive growth

• Regulatory approvals creating significant barriers to new entrants

• Dedicated teams in SDI managing the process

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RIVA STAR - UPDATE

• Riva Star – focus on public health programs to minimise adverse restorative procedures

• Key study conducted by Dental Health Services Victoria (DHSV)

• 12 months trial now complete with encouraging findings

• “…if the trial is successful, it will change the way we manage tooth decay in young children and reduce oral healthy inequity for those that are most in need…” – Dr Yawary*

• 440 teeth treated with only 1 referred for general anaesthetic

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*Lead scientist conducting trial for Dental Health Services Victoria

STRATEGY & OUTLOOK

4 Strategic priorities:

• Sales have continued to grow in 1H19 with the first 4 months ahead of the pcp

• Rationalise product portfolio

• Focus on key products - Pola, Riva and Composites

• Whitening and Aesthetics sales growing faster than market with amalgam declining as % of total sales

• Drive amalgam replacement

• 4 new products to be launched at the IDS in Cologne next year

• Increase innovation and speed to market

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DISCLAIMER

THIS PRESENTATION CONTAINS SUMMARY INFORMATION ABOUT SDI LIMITED (SDI) AND ITS SUBSIDIARIES AND THEIR ACTIVITIES. THE INFORMATION IN THIS PRESENTATION DOES NOT PURPORT TO BE COMPLETE. IT SHOULD BE READ IN CONJUNCTION WITH SDI’S OTHER PERIODIC AND CONTINUOUS DISCLOSURE ANNOUNCEMENTS LODGED WITH THE AUSTRALIAN SECURITIES EXCHANGE, WHICH ARE AVAILABLE AT WWW.ASX.COM.AU.

THE INFORMATION CONTAINED IN THIS PRESENTATION IS NOT INVESTMENT OR FINANCIAL PRODUCT ADVICE AND HAS BEEN PREPARED WITHOUT TAKING INTO ACCOUNT THE INVESTMENT OBJECTIVES, FINANCIAL SITUATION OR PARTICULAR NEEDS OF ANY PARTICULAR PERSON. BEFORE MAKING AN INVESTMENT DECISION, INVESTORS SHOULD CONSIDER THE APPROPRIATENESS OF THE INFORMATION HAVING REGARD TO THEIR OWN INVESTMENT OBJECTIVES, FINANCIAL SITUATION AND NEEDS AND SEEK INDEPENDENT PROFESSIONAL ADVICE APPROPRIATE TO THEIR JURISDICTION AND CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, NO RESPONSIBILITY FOR ANY LOSS ARISING IN ANY WAY FROM ANYONE ACTING OR REFRAINING FROM ACTING AS A RESULT OF THIS INFORMATION IS ACCEPTED BY SDI, ANY OF ITS RELATED BODIES CORPORATE OR ITS DIRECTORS, OFFICERS, EMPLOYEES, PROFESSIONAL ADVISORS AND AGENTS (RELATED PARTIES). NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE BY ANY PERSON, INCLUDING SDI AND ITS RELATED PARTIES, AS TO THE FAIRNESS, ACCURACY, COMPLETENESS OR CORRECTNESS OF THE INFORMATION, OPINIONS AND CONCLUSIONS CONTAINED IN THIS PRESENTATION.

AN INVESTMENT IN SDI SECURITIES IS SUBJECT TO INVESTMENT AND OTHER KNOWN AND UNKNOWN RISKS, SOME OF WHICH ARE BEYOND THE CONTROL OF SDI OR ITS DIRECTORS. SDI DOES NOT GUARANTEE ANY PARTICULAR RATE OF RETURN OR THE PERFORMANCE OF SDI SECURITIES.

PAST PERFORMANCE INFORMATION GIVEN IN THIS PRESENTATION IS GIVEN FOR ILLUSTRATIVE PURPOSES ONLY AND SHOULD NOT BE RELIED UPON AS (AND IS NOT) AN INDICATION OF FUTURE PERFORMANCE.

THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF SDI AND ASSOCIATED ENTITIES OF SDI AND CERTAIN PLANS AND OBJECTIVES OF THE MANAGEMENT OF SDI. FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY, INCLUDING, WITHOUT LIMITATION, THE TERMS “BELIEVES”, “ESTIMATES”, “ANTICIPATES”, “EXPECTS”, “PREDICTS”, “INTENDS”, “PLANS”, “GOALS”, “TARGETS”, “AIMS”, “OUTLOOK”, “GUIDANCE”, “FORECASTS”, “MAY”, “WILL”, “WOULD”, “COULD” OR “SHOULD” OR, IN EACH CASE, THEIR NEGATIVE OR OTHER VARIATIONS OR COMPARABLE TERMINOLOGY. THESE FORWARD-LOOKING STATEMENTS INCLUDE ALL MATTERS THAT ARE NOT HISTORICAL FACTS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH BECAUSE OF THEIR NATURE MAY CAUSE THE ACTUAL RESULTS OR PERFORMANCE OF SDI TO BE MATERIALLY DIFFERENT FROM THE RESULTS OR PERFORMANCE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.

SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING SDI’S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE POLITICAL, REGULATORY AND ECONOMIC ENVIRONMENT IN WHICH SDI WILL OPERATE IN THE FUTURE, WHICH MAY NOT BE REASONABLE, AND ARE NOT GUARANTEES OR PREDICTIONS OF FUTURE PERFORMANCE. NO REPRESENTATION OR WARRANTY IS MADE THAT ANY OF THESE STATEMENTS OR FORECASTS (EXPRESS OR IMPLIED) WILL COME TO PASS OR THAT ANY FORECAST RESULT WILL BE ACHIEVED. FORWARD-LOOKING STATEMENTS SPEAK ONLY AS AT THE DATE OF THIS PRESENTATION AND TO THE FULL EXTENT PERMITTED BY LAW, SDI AND ITS RELATED PARTIES DISCLAIM ANY OBLIGATION OR UNDERTAKING TO RELEASE ANY UPDATES OR REVISIONS TO INFORMATION TO REFLECT ANY CHANGE IN ANY OF THE INFORMATION CONTAINED IN THIS PRESENTATION (INCLUDING, BUT NOT LIMITED TO, ANY ASSUMPTIONS OR EXPECTATIONS SET OUT IN THIS PRESENTATION).

STATUTORY PROFIT IS PREPARED IN ACCORDANCE WITH THE CORPORATIONS ACT 2001 AND THE AUSTRALIAN ACCOUNTING STANDARDS, WHICH COMPLY WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS). UNDERLYING PROFIT IS CATEGORISED AS NON-IFRS FINANCIAL INFORMATION AND THEREFORE HAS BEEN PRESENTED IN COMPLIANCE WITH AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION REGULATORY GUIDE 230 – DISCLOSING NON-IFRS INFORMATION, ISSUED IN DECEMBER 2011.

ALL FIGURES IN THIS PRESENTATION ARE A$ UNLESS STATED OTHERWISE AND ALL MARKET SHARES ARE ESTIMATES ONLY. A NUMBER OF FIGURES, AMOUNTS, PERCENTAGES, ESTIMATES, CALCULATIONS OF VALUE AND FRACTIONS ARE SUBJECT TO THE EFFECT OF ROUNDING. ACCORDINGLY, THE ACTUAL CALCULATIONS OF THESE FIGURES MAY DIFFER FROM FIGURES SET OUT IN THIS PRESENTATION.

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