SDI LIMITED — Capital/Financing Update 2004

Jan 11, 2004

January 12, 2004

RECORD FIRST-HALF SALES FOR SDI AND A BRIEF UPDATE

The Directors of SDI Limited wish to advise that preliminary sales results for July to December 2003 have achieved record sales levels. Sales for the period ended December 31, 2003 increased by 21% to reach a total of $20.1 million, compared with the corresponding period in 2002 of $16.6 million which was an increase of 14.1% over 2001.

Over 94% of sales are international and we have seen a significant increase in sales in local currency over the first six months of last year. In particular, the Company recorded increased sales of 30% in North America, 35% in the EC and general exports from Australia increased by 50%.

Final figures will be released to the market on February 23, 2004. Shareholders are advised that the Company's management is confident that another record after tax profit will be achieved for the period, which is in line with achieving the full year stated target of a 45% increase in after tax profit.

Sales of new products have assisted this record sales achievement. Radii (a LED composite curing device) has now been successfully released in most countries with outstanding acceptance from dental professionals and distributors. The major competitors to Radii are manufactured by 3M Espe, the 'Freelight 2' (www.3mespe.com) and by Kerr Dental, 'L.E.Demetron' (www.kerrdental.com). Production of Radii has been increased to satisfy the anticipated demand by our distributors and dealers in 2004.

SDI's new Glass Ionomer Cement, Riva SC, has been successfully released into several markets and will be released in the second half to all worldwide markets. The professional dental market acceptance has again confirmed our view that this innovative material will become a major product in the near future. Dentists are reporting that Riva SC is a more acceptable product to use when compared with the major competitor products ('Fuji IX' from www.gcamerica.com and Ketac Molar from www.3mespe.com.

The recent acquisition of nearly one acre of adjoining land (including 5 excellent buildings) will provide additional manufacturing areas and will enable the expansion of manufacturing facilities during 2004. These buildings will be used to increase the manufacturing capacity of Pola tooth whitening systems plus the new R&D products which will be released later in the year.

These are some examples of our achievements during the last six months. SDI is confident that the hard work that has gone into producing this record growth will continue to produce excellent results for shareholders in 2004 and beyond.

Jeffery Cheetham, Managing Director.

For further information contact:

Jeffery Cheetham: (03) 87277111 Gerry Bullen: 0418 106 675