SDI LIMITED — Annual Report 2007

Aug 19, 2007

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SDI Limited and controlled entities

ABN 27 008 075 581

Appendix 4E

Financial Report Year Ended 30 June 2007

SDI Limited and controlled entities ABN 27 008 075 581

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Contents
	Page No.
Result for announcement to market	3
Dividends per share	3
Net Tangible Assets per ordinary share	3
Audit Status	3
Commentary SDI Final Result – June 07	4 - 5
Consolidated income statement	6
Consolidated balance sheet	7
Consolidated statement of changes in equity	8
Consolidated cash flow statement	9
Notes to the consolidated statements	10 - 15

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SDI Limited and controlled entities ABN 27 008 075 581

Results for announcement to the market

			A$’000
Revenue from operations	up 7.0%	to	$48,759
Profit from operations after
Income tax attributable to members	down 20.6%	to	$ 4,060
Net profit for the period attributable
to members	down 20.6%	to	$ 4,060
Dividends per Share
	Amount	Franked amount
	Per share	per share at 30%
		Tax.
Final
- current period	0.4 cents	0.4 cents
- previous corresponding period	0.4 cents	0.4 cents

Record date for determining entitlements to dividend: Friday 28 September 2007

	Current	Previous
	Period	Corresponding
	A$’000	Period A$’000
Final dividend is payable	473	471
on:Friday 19 October 2007
	Current	Previous
	Period	Corresponding
		Period
Net Tangible Assets per ordinary
Share. (NTA backing)	16.5 cents	16.1 cents

Audit Status

The audit of the financial report is currently being conducted and the audit report will be issued upon the approval of the financial statements by the directors.

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SDI Limited and controlled entities ABN 27 008 075 581

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SDI Limited Full Year results to 30 June, 2007

SDI Limited today announced a Net Profit after Tax (NPAT) of $4.1m for the full year ended 30 June 2007. This profit was achieved on sales of $48.6m, an increase of 7.5% over the prior year (2006: $45.2m).

The impact of the weakening US Dollar during the year has had a negative impact on the result. Total Sales in Australian dollars were reduced by 1.3% and unrealised currency losses reduced NPAT by approximately $0.9m. The lower than expected sales was also due to the slower roll-out of the Riva product range and the effect of the Company’s strategy of levelling monthly sales by redistributing sales promotions in various markets, particularly in the May and June months. The smoothing of sales for the Company, together with Riva, has collectively reduced NPAT by an additional $1m.

Sales growth in SDI’s trading regions when reported in their local currencies increased as follows: North America: 7.8%, Brazil (1%), Europe 12.3%, Japan 4.8%, and Australia (incl. Exports) 7.9%.

Commenting on the results, the Managing Director, Mr. Jeffery Cheetham, said, “Considerable achievements were made during the year particularly in product quality improvements, automating production processes, sales and marketing initiatives as well as developing SDI’s strategy for the future. SDI Brazil’s sales were disappointing due to the impact of supply problems. Logistics improvements as well as a new key appointment of a local Finance and Administration Manager will ensure that these problems do not reoccur.

As mentioned in the half-year summary, the Riva Glass Ionomer Cement (GIC) project is moving forward. The delivery system of our Riva GIC is an intricate unidose single use capsule, the design of which has been reviewed and modified and is now coming into production. Although the world market for GIC is large and growing, the Company again reiterates that it will be 3-5 years before Riva becomes a substantial profit contributor as it seeks ongoing recognition and acknowledgement from key opinion leaders and academics worldwide.

The continued automation of the Company’s operations, such as new high speed filling lines, introduces a large number of efficiencies including flow-on production cost reductions as well as enabling the maintenance of lower inventories which, in turn, assists cash flows.”

New products continue to be a major part of the Company’s strategy. SDI’s research and development programs have continued to ensure that existing products are further refined to meet market demands. A new 7[th] generation dental adhesive – Go! – was recently released and is having strong market acceptance in its launch countries. SDI’s R&D team is focusing on expanding existing technology and as a result there is a pipeline of products, which will be released over the next 1-3 years.

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SDI Limited and controlled entities ABN 27 008 075 581

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SDI Limited Full Year results to 30 June 2007 (Continued)

SDI further stated that the future of the Company will ultimately depend on the successful expansion of its sales and marketing efforts and much work has been done during this 12-month period on consolidating sales and marketing plans. The major focus will be building on the Company’s existing sales network with strategic expansion in selected ‘high return’ regions.

Sales and Marketing Director, Ms. Samantha Cheetham, stated, “The Company’s sales force in North America and Europe will be expanded. SDI has recently appointed an Eastern European manager, based in Prague. The Company has always sold in this region but sales will now be enhanced by our own SDI presence. SDI’s sales team in Germany has been strengthened and the Company intends to appoint a new European Zone Distributor manager to represent SDI exclusively in several EU countries.

I am also excited about SDI’s recent appointment of a new country manager for India, based in Mumbai. This new country manager has strong dental product experience and will work with our existing distributor to assist the growth of SDI in that country.

I am very pleased that the new appointment of our Marketing Manager, based in Melbourne, will assist my team to lift the Company profile worldwide.

SDI will not see an immediate effect from all these initiatives, however, I would be extremely hopeful that in a 12/18 month time span we will start to see a significant impact on sales going forward.”

The Board of Directors has declared a final fully franked dividend of 0.4 cents per share (totalling 0.7 cps for the full year), which will be paid on 19 October 2007. The Company’s DRP remains applicable for this dividend payment and the Company is offering a 5% discount on the price per share to participating shareholders.

For further information, please contact:

Gerry Bullon, INSOR Investor Relations 0418 106 675

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SDI Limited and controlled entities ABN 27 008 075 581

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Consolidated Income Statement For The Year Ended 30 June 2007

	Economic	Entity
	30 June	30 June
	2007	2006
	$’000	$’000
Sales revenue	48,613	45,153
Cost of sales	(17,969)	(15,985)
Gross profit	30,644	29,168
Other revenues	146	424
Selling & administration expenses	(21,880)	(21,136)
Research & development expenses	(403)	(272)
Finance costs	(895)	(964)
Other expenses	(1,974)	(807)
Profit before income tax	5,638	6,413
Income tax expense	(1,578)	(1,294)
Profit after related income tax
expense	4,060	5,119
Basic earnings per share
(cents per share)	3.4 cents	4.4 cents
Diluted earnings per share
(cents per share)	3.4 cents	4.3 cents

The accompanying notes form part of these financial statements.

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SDI Limited and controlled entities ABN 27 008 075 581

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Consolidated Balance Sheet As At 30 June 2007

	Economic	Entity
	30 June	30 June
	2007	2006
	$’000	$’000
Current Assets
Cash and cash equivalents	2,893	982
Trade and other receivables	9,617	11,195
Inventories	10,425	12,880
Current tax assets	451	775
Other current assets	585	375
Total current assets	23,971	26,207
Non-Current Assets
Property, plant and equipment	14,408	12,781
Intangible assets	14,569	11,469
Deferred tax assets	1,473	1,549
Other non-current assets	8	45
Total non-current assets	30,458	25,844
Total Assets	54,429	52,051
Current Liabilities
Trade and other payables	3,314	3,360
Short-term borrowings	2,775	5,185
Current tax liabilities	644	154
Short-term provisions	1,542	1,194
Total current liabilities	8,275	9,893
Non-Current Liabilities
Long-term borrowings	8,947	9,157
Deferred tax liabilities	2,876	2,289
Other long-term provisions	228	315
Total non-current liabilities	12,051	11,761
Total Liabilities	20,326	21,654
Net Assets	34,103	30,397
Equity
Issued Capital	12,644	12,277
Reserves	504	400
Retained earnings	20,955	17,720
Total Equity	34,103	30,397

The accompanying notes form part of these financial statements.

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SDI Limited and controlled entities ABN 27 008 075 581

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Consolidated Statement Of Changes in Equity As At 30 June 2007

	Economic	Entity
	30 June	30 June
	2007	2006
	$’000	$’000
Total Equity at the beginning of
the year	30,397	25,712
Shares issued during the period	366	166
Adjustment to tax based assets	0	24
Hedging Reserve	420	(420)
Adjustment arising from the
translation of foreign controlled
entities’ financial statements	(315)	384
Profit attributable to members of the
parent entity	4,060	5,119
Sub-total	34,928	30,985
Dividends paid or provided for	(825)	(588)
Total Equity at the end of the
year	34,103	30,397

The accompanying notes form part of these financial statements

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SDI Limited and controlled entities ABN 27 008 075 581

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Consolidated Cash Flow Statement For The Year ended 30 June 2007

	Economic	Entity
	30 June	30 June
	2007	2006
	$’000	$’000
Cash Flows from operating
activities
Receipts from customers	49,580	47,227
Payments to suppliers and employees	(36,950)	(40,733)
Interest received	32	16
Finance costs paid	(895)	(964)
Income tax (paid)/refund	(61)	43
Net cash received from operating
activities	11,706	5,589
Cash Flows from investing
activities
Proceeds from sale of property, plant
and equipment	51	25
Purchase of property, plant and
equipment	(2,950)	(1,740)
Purchase of other non-current assets	(3,673)	(3,875)
Net cash (used in) investing
activities	(6,572)	(5,590)
Cash Flows from financing
activities
Dividends paid by parent entity	(459)	(512)
Proceeds from borrowings	1,719	756
Repayments of borrowings	(2,319)	(421)
Net cash provided by financing
activities/(used in)	(1,059)	(177)
Net decrease in cash held	4,075	(178)
Cash at 1 July 2006	(1,259)	(1162)
Effect of exchange rates on cash
holdings in foreign currencies	(146)	81
Cash at 30 June 2007	2,670	(1,259)

The accompanying notes form part of these financial statements.

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SDI Limited and controlled entities ABN 27 008 075 581

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Notes to the financial statements for the year ended 30 June 2007

Note 1 Basis of Preparation

The full-year consolidated financial statements are a general purpose financial report prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards, Urgent Issues Group Interpretation and other authoritative pronouncements of the Australian Accounting Standards Board.

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

The financial statements of SDI Limited and controlled entities and SDI Limited as an individual parent entity comply with all Australian equivalents to International Financial Reporting Standards (AIFRS) in their entirety.

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has applied.

Revision of Accounting Estimates

Capitalised development costs that were previously designated as having an indefinite life have been reviewed and the Company has determined that they have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project of up to 30 years. As a result of this change, amortisation for the year increased by $208,582. It is impractical to disclose the effect of this change on future periods due to the timing of project completions.

	Economic	Entity
	30 June	30 June
	2007	2006
	$’000	$’000
Note 2 Profit from Ordinary Activities
The following revenue and expense items are
relevant in explaining the financial performance
for the year ended 30 June 2007
Depreciation and amortisation of non-
current assets:
Plant & Equipment	(1,299)	(1,262)
Intangibles	(468)	(207)
Total Depreciation and Amortisation	(1,767)	(1,469)
Foreign Currency Translation
- Foreign currency translation gains/(losses) –	(198)	(409)
realised
- Foreign currency translation gains/(losses) –	(1,062)	505
unrealised
Total Foreign Currency Gains/(Losses)	(1,260)	96

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SDI Limited and controlled entities ABN 27 008 075 581

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Notes to the financial statements for the year ended 30 June 2007 (continued)

Note 3 Dividends

ote 3 Dividends
	Economic	Entity
	30 June	30 June
	2007	2006
	$’000	$’000
Note 3 Dividends
Declared interim fully franked dividend of 0.3
cents (2006: 0.2 cents) per share franked at tax
rate of 30% (2006: 30%) - paid	354	235
Final fully franked dividend of 0.4 cents (2006: 0.4
cents) per share franked at tax rate of 30% (2006:
30%) – declared	473	471

The Dividend Reinvestment Plan (DRP) will operate in respect of the proposed final dividend. Under the Plan, participating shareholders elect to apply dividends in whole or in part to the purchase of ordinary shares at an issue price.

In general and unless the SDI Board decides otherwise, shares will be allocated at the ‘Average Market Price’ (which is the arithmetic average of the daily weighted average market price as the directors may determine) of SDI’s shares on the ASX over a period of 5 business days prior to and including the Dividend Record date.

The Board may determine in relation to all or any dividends paid, that shares will be allocated under the DRP subject to a discount below the average market price. At this time, the Board has determined that a 5% discount will apply for this final dividend.

Last date for receipts of election notice for participation in DRP is 28 September 2007.

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SDI Limited and controlled entities ABN 27 008 075 581

Notes to the financial statements for the year ended 30 June 2007 (Continued)

SDI Limited and controlled entities

Note 4 Segment Reporting

Primary Reporting – geographic segments (by location of assets)

	Australia	Europe	North	South	Asia/	Eliminations	Consolidated
			America	America	Pacific
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
2007 Revenue
External segment revenue	15,497	16,132	11,880	4,573	532	-	48,614
Inter-segment revenue	17,409	7,573	-	-	-	(24,982)	-
Total segment revenue	32,906	23,705	11,880	4,573	532	(24,982)	48,614
Other unallocated revenue							146
Total revenue							48,760
Result
Segment result	3,937	2,412	738	(151)	(366)	(37)	6,533
Unallocated Corporate Expenses							(895)
Profit before income tax							5,638
Income tax expense							(1,578)
Net profit after income tax							4,060

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SDI Limited and controlled entities ABN 27 008 075 581

Notes to the financial statements for the year ended 30 June 2007 (Continued)

SDI Limited and controlled entities

Note 4 Segment Reporting (continued)

Primary Reporting – geographic segments (by location of assets)

	Australia	Europe	North	South	Asia/	Eliminations	Consolidated
			America	America	Pacific
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
2006 Revenue
External segment revenue	14,360	14,075	11,616	4,551	551	-	45,153
Inter-segment revenue	17,069	7,739	-	-	-	(24,808)	-
Total segment revenue	31,429	21,814	11,616	4,551	551	(24,808)	45,153
Other unallocated revenue							424
Total revenue							45,577
Result
Segment result	7,366	544	390	741	(604)	(1,060)	7,377
Unallocated Corporate Expenses							(964)
Profit before income tax							6,413
Income tax expense							(1,294)
Net profit after income tax							5,119

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SDI Limited and controlled entities ABN 27 008 075 581

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Notes to the financial statements for the year ended 30 June 2007 (Continued)

Note 4 Segment Reporting (continued)

Secondary Reporting – business segments

The economic entity operates predominantly in one business segment being the manufacturing and distribution of dental restorative products.

Inter-segment Transfers

The segment revenues, expenses and result include transfers between segments. The pricing of intersegment transactions is based on cost plus an appropriate mark-up, which reflects market conditions of the segment into which the sales are made. These transfers are eliminated on consolidation.

		Economic Entity	Economic Entity
		30 June	30 June
		2007	2006
		$’000	$’000
Note 5	Issued Capital
Fully paid ordinary shares at the beginning of reporting period		12,277	12,111
Shares issued during the year
-	107,314 on 21 October 2005		93
- -	93,862 on 12 May 2006 206,410 on 20 October 2006	147 132	73
-	161,199 on 4 May 2007	39
-	80,000 on 29 January 2007	48
-	100,000 on 21 March 2007
At reporting date		12,643	12,277
		No.	No.
Ordinary shares at the beginning of reporting period		117,680,782	117,473,606
Shares issued during the year
-	Dividend Reinvestment Plan Issue on 21 October 2005		107,314
-	Dividend Reinvestment Plan Issue on 12 May 2006		93,862
-	Employee Share Plan Issue on 14 June 2006		6,000
-	Dividend Reinvestment Plan Issue 20.10.06	206,410
-	Options Converted to Shares on 29.01.07	80,000
-	Options Converted to Shares 21.03.07	100,000
-	Dividend Reinvestment Plan Issue on 04.05.07	161,199
At reporting date		118,228,391	117,680,782

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SDI Limited and controlled entities ABN 27 008 075 581

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Notes to the financial statements for the year ended 30 June 2007 (Continued)

Executive Share Option Plan

No options were vested during the financial year ended 30 June 2007, as the Economic Entity did not achieve the minimum earnings per share target for year of 5.9 cents.

		Economic	Entity
		30 June	30 June
		2007	2006
		$’000	$’000
Note	6 Reconciliation of Cash
Cash	on Hand	29	5
Cash	at Bank	2,864	977
Cash	as per Balance Sheet	2,893	982
Bank	Overdrafts	(223)	(2,241)
Cash	as per Cash Flow Statement	2,670	(1,259)

Note 7 Contingent Liabilities

There were no contingent liabilities since the last annual reporting date.

Note 8 Events Subsequent to Reporting Date

There has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

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