SDI LIMITED — Annual Report 2003

Aug 24, 2003

PRELIMINARY FINAL REPORT GIVEN TO THE ASX UNDER LISTING RULE 4.3A

Name of entity

SDI Limited
ABN or equivalent reference #
	27 008 075 581
Reporting period	Previous corresponding period
June 30 2003		June 30 2002
Contents		Item
Results for announcement to the market		1.
Commentary on Results		2.
Condensed Consolidated Statement of Financial Performance		3.
- Revenue from ordinary activities	3.1
- Expenses from ordinary activities	3.2
- Amortisation and Impairment Expenses	3.3
- Comparison of Half-Year Profits	3.4
Condensed Consolidated Statement of Financial Position		4.
- Consolidated Retained Profits	4.1
Condensed Consolidated Statement of Cash Flows		5.
- Reconciliation of Cash	5.1
Net tangible assets per ordinary share		6.
Dividends		7.
Basis Of Preparation		8.
Other Information Regarding the Accounts		9.
- Audit Confirmation	9.1
- Segment Report	9.2

1. RESULTS FOR ANNOUNCEMENT TO THE MARKET

				A$ 000
Revenue from ordinary activities	up	9.3%	to	38,685
Profit from ordinary activities after incometax attributable to members	up	36.0 $%$	to	5,451
Net profit for the period attributable tomembers	up	36.0%	to	5,451

Dividends per Share	Amount per share	Frankedamountper share at 30 %tax
Final	4.5 cents	$4.5$ cents
Interim	3.0 cents	3.0 cents

Record date for determining entitlements to dividends 3rd October 2003

SDI Limited Commentary on results for the year ended 30 June 2003

The Board of Directors of SDI Limited today announced a 36% increase in profit after tax to $5.45m, for the financial year ended 30 June 2003. Earnings Per Share of 23.3 cents increased by 35.5% over the prior year and return on equity grew from 22.7% to 24.7%.

Profit before tax increased by 39% to $7.84m, with earnings before interest and tax up by 36.5% to $8.09m.

This result was achieved by strong increases in international sales revenue. In local currencies, sales in North America increased by 14.7%, South America by 13.6% and Europe by 18.8%. A stronger Australian dollar resulted in a consolidated sales increase of 7.2% to AUD 36.7m. Export sales represented 93% of total consolidated sales.

SDI Chairman, Mr. Russell Smith, commented that this outstanding result was delivered despite external difficulties facing the Company during this period. "If one considers that SDI, like many other companies, had to deal with the effects of SARS, the destabilising effect of the war in Iraq and a severe North American winter, the management and staff have done an exceptional job in keeping our growth ahead of even the highest of market expectations".

Referring to the Company's ability to again deliver in excess of 30% earnings growth, SDI's Managing Director, Mr. Jeffery Cheetham, expressed satisfaction in the continuing organic growth of the Company's products. Mr. Cheetham said "It is not insignificant that this year's result has been achieved by organic growth in existing markets. The sales of new products launched at the International Dental Show in Cologne, Germany earlier this year will impact positively on the results for 2004 and beyond".

Mr. Cheetham further advised that, based on current Company projections, he was comfortable in re-affirming the expectation that SDI would continue to deliver strong earnings growth into the future. As an indication of this, SDI announced on 30 July that the EPS target to activate the Company's Executive Option Plan for 2004 is 34 cents. This represents an increase of 46% over the 2003 EPS of the 23.3 cents announced today.

In discussing SDI's new products, Mr. Cheetham said that Riva (a new generation Glass Ionomer Cement Restorative material), is in full production and that there are strong indications that demand will exceed the Company's original expectations which the production line has the capacity to meet.

2. (Continued)

The Radii device (a state of the art LED curing device) has been well accepted by the international market, especially the United States. A major USA dental distributor has chosen the Radii as its sole private label LED curing device. Demand to date has far exceeded SDI's expectations and the Company is now increasing production to cater for this growth in demand.

All other new products released at the International Dental Show in Cologne, Germany earlier this year are in full production and are being well accepted in the market.

SDI's CFO, Mr. John Slaviero, commented that as a result of export sales representing a high percentage of SDI's total sales, the Company has protected its currency position through currency option contracts. Contracts are in place for USD to December 2005 and Euros to January 2005 at an average rate of 55 cents. Due to the structure of SDI's business, natural hedging arises by incurring operational expenditure in both USD and Euros.

The R $&$ D Department continues to advance in the development of new products. The continual introduction of successful new products should ensure SDI's competitive edge into the future, thereby increasing market penetration and profitability.

The Board has declared a final dividend of 4.5 cents (2002; 3cents) lifting the total dividend for the year to 7.5 cents, an increase of 50% over the prior year (5 cents). The dividend will be fully franked and will be paid on 20 October 2003.

3. CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

	Current PeriodA$'000	Provious correspondingperiod AS'000
Reversue from ordinary activities - refer 3.1 below	38,685	35,403
Expenses from ordinary activities - refer 3.2 below .	(30, 595)	(29, 476)
Borrowing Costs - refer 3.2 below	(246)	(284)
Share of net profits(losses) of associates and joint venture entities
Profit from ordinary activities before tax	7,844	5,643
income tax on ordinary activities.	(2, 393)	(1,635)
Profit from ordinary activities after tax	5,451	4,008
Profit from extraordinary items after tax - refer 3.3 below
Net profit	5,451	4,008
Net profit attributable to outside equity interests.
Net profit for the period attributable to members	5,451	4,008
Non-Owner Changes in Equityincrease(Decrease) in revaluations reserves
Net exchange differences on translation of financial report of foreign controlled entity.	(384)	(36)
Net amount of each revenue, expense or valuation adjustment, recognised directly in equity inaccordance with an Accounting Standard
Net amount of each initial adjustment recognised directly in equity in accordance with transitionalprovisions of UIG Consensus Views
Total revenues, expenses and valuation adjustments lattributable to members of the parent entityand - recognised directly in equity	(384)	(36)
Total changes in equity other than those resulting from transactions with owners as owners	5,067	3,972
Basic Earnings Per Share	23.3 cents	17.2 cents
Diluted Earnings Per Share	23.3 cersts	17.2 cents
Dividends Per Share	7.5 cersts	5.0 cents
Weighted average number of ordinary shares used as a denominator in the calculation of BasicEarnings Per Share	23,374,454	23,333,160
Weighted average rumber of ordinary shares and potential ordinary shares used as a denominatorin the calculation of Diluted Earnings Per Share	23,406,733	23,333,160
The following securities have been classified as potential ordinary shares and are included in thedetermination of dilutive EPS;- Executive Options	86,000
The following securities are not included in the calculation of dilutive EPS as the issue of shares iscontingent upon fature events;- Executive Options	344,000
Earnings used in the calculation of Basic & Dilutive EPS ASD00	5,451	4,008

NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE

3.1 Reversue from Ordinary Activities

	Current PeriodA$'000	Provious correspondingperiod AS'000
Revenue from Sales	36,699	34,227
Revenue from Services	$\ddot{\phantom{1}}$
Contract Revenue	$\cdot$
Interest Revenue	8	16
Rental Revenue	٠
Other relevant revenues
- Grants Received Government	696	522
- Realised Foreign Exchange Gains	635	544
- Unrealised Foreign Exchange Gains	453	35
- Other Income	194	59
	38,685	35,403

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3.2 Expenses from Ordinary Activities

	Current PeriodA$'000	Provious correspondingperiod AS'000
Cost of salesSeffing & Administration ExpensesReasearch & Development ExpensesBorrowing Costs	(12, 527)(16, 304)(1, 130)(246)	(12, 853)(15, 369)(1, 0.75)(284)
Other expenses from ordinary activities	(664)	(179)
	(30, 841)	(29,760)

Profit from ordinary activities before income tax has been derived after :

	Current PeriodA$'000	Provious correspondingperiod AS'000
Expenses
Depreciation	(835)	(972)
Amortisation	(621)	(288)
Bad & Doubsful Debts	(38)	(9)
Writedown of inventories to net realisable value		(285)

3.3 Amortisation and Impairment Expenses

	Consolidated - Current period
	Before taxAS 000	Related taxAS 000	Related outsideequity interestsAS 000	Amount (aftertax) attributableto memborsA$'000
Amortisation of goodwill	$\cdot$	$\ddot{\phantom{a}}$	٠
Amortisation of other intangibles	621	(123)	٠	498
Total amortisation of intangibles	621	(123)	$\mathbf{r}$	498
Impairment of goodwill	$\cdot$	$\cdot$	٠
Impairment of other intangibles	٠	٠	٠
Impairment of other assets	$\mathbf{r}$	٠.	$\sim$
	٠	٠	$\sim$	v.

Г

т

5,451

4,008

3.4 Comparison of Half-Year Profits

	Current PeriodA$'000	Provious correspondingperiod AS'000
Consolidated profit(loss) from ordinary activities after tax attributable to members reported for the1st half yearly report	1,758	1.148
Consolidated profit(loss) from ordinary activities after tax attributable to members for the 2nd halfyear.	3,693	2.860

Total Net Profit for Year

4. CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

	Current PeriodA$'000	Previouscorresponding periodA$'000
Current Assets
Cash assets	1,553	1,494
Receivables	10,694	7,748
Inventories	6,346	6,548
Other financial assets
Tax Assets
Other - Prepayments	216	195
Total Current Assets	18,809	15,985
Non-Current Assets
Receivables
Investments accounted for using the equity method
Other financial assets
Property, plant and equipment (net)	8,102	6,282
Intangible assets (net)	5,922	5,776
Deferred Tax Assets	520	356
Other - Prepayments	16	30
Total Non-Current Assets	14,560	12,444
TOTAL ASSETS	33,369	28,429

Г

т

Current Liabilities
Payables	2,466	2,514
Interest-bearing liabilities	1,252	955
Tax liabilities	2,078	1,554
Provisions	849	1,458
Other
Total Current Liabilities	6,644	6,481
Non-Current Liabilities
Payables
Interest-bearing liabilities	3,646	3,100
Deferred Tax liabilities	1,031	1,061
Provisions	118	122
Other
Total Non-Current Liabilities	4,695	4,283
TOTAL LIABILITIES	11,339	10,764
NET ASSETS	22,030	17,665

4. CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)

Equity11,700Capital/Contributed Equity1.159Reserves9.171Retained Profits - refer 4.1 below	Equity Attributable to Members of the Parent EntityOutside equity interests in controlled entities	22,030	17,665
			4,422
			1,543
			11,700

Total Equity

17,665

22,030

Preference Capital included as part of Capital/Contributed Equity above

NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

4.1 Consolidated Retained Profits

	Current PeriodA$'000	Previouscorresponding periodAS 000
Retained Profits (Accumulated Losses) at the beginning	4,422	1.682
of the financial period
Net profit (loss) attributable to members	5,451	4.008
Net transfers from (to) reserves
Net effect of changes in accounting policies
Dividends and other equity distributions paid or payable	(702)	(1, 168)
Retained Profits (Accumulated Losses) at the end of the financialperiod	9,171	4.422

5. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	Current Period	Previouscorresponding
	A$'000	periodA$'000
Cash flows related to operating activities
Receipts from customers	35,436	34.303
Payments to suppliers and employees	(28, 983)	(27, 807)
Dividends received from associates
Other dividends received
Interest and other items of a similar nature received	8	36
Interest and other costs of finance paid	(246)	(284)
Income taxes paid	(2,062)	(1,259)
Other Reasearch & Development Grant	696	522
Net operating cash flows	4.849	5.491
Cash flows related to investing activities
Payments for purchases of property, plant and equipment	(2,850)	(2,794)
Proceeds from sale of property, plant and equipment	220	36
Payments for purchases of equity investments
Proceeds from sale of equity investments	٠
Loans to other entities.	٠
Loans repaid by other entities
Other Payments for Intangibles	(767)	(480)
Net investing cash flows	(3, 397)	(3.258)

Cash flows related to financing activitiesProceeds from issues of securities (shares, options etc)Proceeds from borrowingsRepayment of borrowingsDividends paidOther	٠572(145)(1, 403)	1,462(1, 448)(933)
Net financing cash flows	(976)	(919)
Net increase (decrease) in cash held	476	1,314
Cash at beginning of period refer 5.1 below	1,197	(117)
Exchange rate adjustments to cash	(120)
Cash at end of period - refer 5.1 below	1,553	1,197

NOTES TO THE CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

5.1 Reconciliation of Cash

Cash on hand and at bank
Deposits at call
Bank overdraft
Other

Total cash at end of period

Previouscorrespondingperiod A$'000 Current PeriodA$'000 $1,487$ 1,494 $_{66}$ $(297)$ $\epsilon$ 1,553 1,197

L

OTHER NOTES TO THE CONDENSED FINANCIAL

STATEMENTS

6.	NET TANGIBLE ASSETS PER ORDINARY SHARE INTA.
	backing)

$\gamma$ DIVIDENDS

Final - current period

Interim - current period

$\mathbf{7.1}$ Dividends per Share

• previous corresponding period

• previous corresponding period

Amount per share	Franked amount per share at 30$%$ tax
4.5 cents$3.0$ cents	4.5 cents3.0 cents	cents.$\overline{\phantom{a}}$cerits٠
3.0 cents2.0 cents	3.0 cents2.0 cents	cents.٠cerits-

Total Dividends $7.2$

Interim - paid on 12th May 2003 (2002: 24th May 2002)

Fieal - payable on 20th October 2003 (2002: 22nd October 2002)

Current Period000	A$	Previous CorrespondingPeriod AS '000
	702	467
	1,053	701
	1,755	1,168

.Tent Period

66.9 cents

.Previous corres period

50.9 cents

BASIS OF PREPARATION $\hat{\mathbf{a}}$

This presiminary final report is prepared in accordance with the requirements of listing sule 4.3A. The financial statements in this report are "condensed financial statements" as defined in AASB 1029: interim financial reporting.

It is recommended that this report be read in conjunction with the arsnual financial report for the year ersded 30 June 2002 and any public announcements made by SDI Limited and its controlled entities during the financial year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

The accounting policies have been consistently applied by the

ontities in the economic entity and are consistent with those

applied in the 30 June 2002 annual report.

The presiminary final report does not include full disclosures of

the type normally included in the annual financial report. $\mathbf{9}$

OTHER INFORMATION REGARDING THE ACCOUNTS

The information contained in this Appendix 4E is based on $9.1$ accounts which:

- have been audited.
are in the process of being audited	⋒
- have not yet been audited.

9.2 SEGMENT REPORT

SDI

PRIMARY REPORTING GEOGRAPHIC SEGMENTS (BY LOCATION OF ASSETS)

30 June 2003	AUSTRALIA$'000's	EUROPE$'000s	NIH AMERICA$'000s	STH AMERICA$'000s	MIDDLE EAST$'000s	PACIFICASIA/$'000s	UTHER$'000s	ELIMINATIONS$'000s	CONSOLISINTED.$'000's
Revenue
Éxternal secosent revenue	12.463	11.033	12.663	2.518					38.677
Inter-segment cevenue	12.737				$\cdot$	٠.		(12.733)	$\sim$
Total segment revenue	25.194	11.033	12.663	2.518	$\mathbf{r}$	$\sim$		(12.722)	38.677
Other unaltocated revenue.									Y.
Tatal Revenue									38,685
Result
Segment result	6.991	259	884	496					8.229
Grisitocated Corporate Expenses									(386)
Profit from ensinary activities before incerne tax									7.944
Incorse tax expense									(2.393)
Net profit after income tax									5.451
The segment result has been arrived at after charging (crediting) thefollowing thone:
Oepreciation and amortisaton expense	1.352	27	69			$\mathbf{r}$			1.456
Mezi cash expenses other than depredated and amortraation.	15		з						18
Proceeds on sale of property.	220			$\overline{\phantom{a}}$	. .	$\sim$			220
Written down value of property sold	(196)			٠.	$\cdot$				(196)
	24			٠	٠.			$\cdot$	-24
Inventory write-down				٠				٠	$\mathbf{r}$
Assets
Segment assers	29.646	2.773	3.946	1.152				(4.148)	33.369
s/marlocated Corporate assers.
Consolidated total assets									33.369
Liabilities
Segment Isobistries	9.998	1.907	2.824	774	$\cdot$	$\cdot$		(3.963)	11.339
skhallocated corporate lashiblies									$\cdot$
Consolidated total fishlifties									11.339
Other information
Acquestitate of non-current assets	3.973	206						(69)	3.617
Revenues from sales to external customers by location of customers	2.527	12.659	12.593	4.947	1.097	2.749	3.39		36.699

PŘIMARY RĚPORTINGGEOGRAPHIC SECMENTS (BY LOCATION OF ASSÉTS)

30 Julie 2002	AUSTRALIA$'000s	EUROPE$'000s	NIH AMERICA$'000s	STR AMERICA$'000s	MIDDLE EAST$'000's	PACIFICASIA/$'000s	UTHER$'00Ds	ELIMINATIONS$'000s	CONSOLISIN LEG$'000's
Revenue
External segment revenue	10.745	8.784	52.774	3.094					38.397
Inter-segment nevenue	12.738							(12.728)
Tatal segment revenue	22.483	8.784	12.774	3.094	$\sim$	$\cdot$		(12.728)	38.397
Other idealsocated revenue									16.
Tutal Revenue									35,403
Result
Segment result	4.934	194	343	476					5.927
Gratificated Corporate Expenses									2284)
Profit from ensinary accivities before incerne tax									5.643
Incorse tax expense.									(1.635)
idet profit after income tax									4,009
The segment result has been arrived at ufter charging (eveliting) thefollowing thone:
Oepreciation and amortisaton expense	3.172	20	51	37					1.260
Mezi cash expenses other than depredated said amortraation.	(164)		$\langle S \rangle$						(169)
Proceeds on sale of property			-56						16
Watten down value of property sold			(36)						(35)
			(19)						(19)
Inventory whte-down.	288								285
Assets
Segment assets	25.976	2.728	2.819	1.493	$\mathbf{r}$			(4.487)	28.429
Enterlocated Corporate assets
Consolidated total assets									28,429
Liabilities
Segment Sobistries	9.908	1.961	2.042	1.355		$\cdot$		(4.362)	10.764
sAnastocated corporate lasbildies									$\sim$
Consolidated total fishlifties									10,764
Other information
Acquisitions of non-current assets.	3.025	57	160	22					3.274
Revenues from safes to external customers by location of customers	2.453	10.106	13.953	4.474	578	2.644	309		34.227

SECONDARY REPORTINGBUSINESS SEGMENTS

The consciutates entry operates predominately to one business segment being the manufactore and distribution of dental restorative products.