SDI LIMITED — Interim / Quarterly Report 2021

Feb 18, 2021

SDI Limited

ABN 27 008 075 581

Interim Report - 31 December 2020

SDI Limited Commentary - half-year results 31 December 2020

MELBOURNE, Australia – SDI Limited (ASX: SDI). Net profit after tax of $4.6 million for the six months ending 31 December 2020, compared with $3.5 million for the same period last year.

Summary financials (AUD)	HY 2021	HY 2020	Change %
Sales ($m)	36.8	40.0	(8.0)
EBITDA ($m)	8.7	7.1	21.8
NPAT ($m)	4.6	3.5	30.9
Net cash ($m)	11.1	6.1	82.6
Interim ordinary dividend (cents per share)	1.50	1.35	11.1

• Total sales $36.8 million, down 8.0% on last year, reflecting the continued pandemic challenges faced in UK and Australian direct export markets and the constraints on shipping products in many markets. When adjusted for currency movements, sales were down 3.9%.
• Earnings before interest, tax, depreciation, and amortisation ('EBITDA') was up 21.8% to $8.7 million, compared to $7.1 million for the corresponding period last year.
• Earnings per share ('EPS') was up 0.91 cents to 3.85 cents compared to 2.94 cents for the same period last year.
• Strong cash and no debt.
• Interim fully franked ordinary dividend of 1.50 cents per share, up 11.1% for the same period last year.
• Year-on-year operating expenses were carefully managed, down 19.0% in local currencies, after adjusting for government assistance programs, expenses were down 12.9%.
• Investment on research and development continued.
• The strategic review was completed on the Brazilian operations, and implementation is in progress. The Brazilian Real devaluated by 31% against the Australian Dollar in the last 6 months having a material impact, resulting in $0.7 million of realised currency losses.

Commenting on the result Chief Executive Officer Samantha Cheetham said: "This has been a challenging period for the group. The health and safety of our team was always at the forefront of our minds and we continue today with strict infection control policies and the use of remote conferencing tools for all staff team meetings where practical."

"While conditions began to improve in many regions, there were still several key markets impacted by strict government controls on dental practices. As some of these restrictions began to lift, we saw the pent-up demand we had spoken about at the full year begin to gain traction, with some regions close to normal. We knew this was always going to be a tough half, given the record result in comparable period, but despite this and the fact that we saw constraints on shipping, key markets including the UK and direct exports materially affected, our performance was very good".

Key product category sales

Product category sales	Change in localcurrency %	Change in AUD.%	Total AUD sales%
Aesthetics	(7.3)	(10.6)	44.7
Equipment	12.6	2.6	7.7
Whitening	19.3	16.0	33.5
Amalgam	(32.1)	(36.7)	14.1

Whitening products have shown a strong increase, up 19.3% in local currency on the prior period, due to the anticipated pent-up demand, supported by the release of the new Pola Light product, and the re-branding of the Pola products. Aesthetics overall were weak, down 7.3% in local currency, impacted by the UK and direct exports. In markets where the restrictions were progressively eased - Australia, North America, and parts of Europe - growth was strong and further evidence of pent-up demand. As has been seen in recent results the trend in the Amalgam product continues, down 32.1% in local currency. This significant decline was due in part to recent trends, but also in this period due to government restrictions in the UK and in many export markets. Further, the pandemic impacted government tender activity in the half. The smallest segment, Equipment, grew strongly in local currency terms, up 12.6% on the prior period, driven primarily by increased traction of the Radii Xpert LED curing light.

Product sales by Business Unitadjustedforcurrencymovements	Amalgam			Non - Amalgam
	% Change	% of Total Sales	% Change	% of Total Sales
Australia (including direct exports)	(51.9)	8.0	(3.7)	92.0
Brazil	18.4	25.3	(1.2)	74.7
Europe	(41.7)	10.5	0.4	89.5
North America	(21.9)	25.3	25.3	74.7

Sales by business unit	Growth/(decline) inlocal currency %	Growth/(decline) inAUD%	Total AUD sales%
Australian sales (including directexports)	(10.5)	(12.5)	36.6
North America	9.4	3.7	25.0
Europe	(6.9)	(6.2)	32.7
Brazil	3.1	(27.7)	5.7
Total	(3.9)	(8.0)	100.0%

Sales by business unit reflect the impact of the pandemic, and the varying status of government restrictions in each region. The European Unit was down only 6.9% in local currency, despite its largest market the UK seeing sales down 41.7% on the prior period. The Australian sales unit, with sales down 10.5% in local currency, was impacted by the sharp drop in Australian direct export markets, down 29.7%, with the Australia domestic sales up an impressive 43.2% on the prior period.

Brazilian sales decreased 27.7% in Australian dollars, when adjusted for currency movement, sales increased by 3.1% reflecting the significant devaluation of the REAL. In addition to this, there were significant supply issues due to backlogs at shipping ports to Brazil. The review of the Brazilian operations was completed, and the implementation of the restructure is in progress. The restructure aimed to simplify the business model resulting in a 50% reduction in employees, lower rental costs by moving the business to southern Brazil, and using a third-party company to assist warehousing, packing and distribution.

Sales by region	HY 2021 (AUD)	HY 2020 (AUD)	% Change
APAC	8.7m	7.8m	11.1
Middle East / Africa	2.0m	4.4m	(53.9)
South America	3.3m	4.5m	(28.3)
North America	9.2m	8.9m	3.7
Europe	13.6m	14.3m	(5.1)

Reflecting the pandemic status by region, APAC, North America, and parts of Europe showed a gradual easing of restrictions and the UK, Latin America, and the Middle East markets continued to experience restrictions. Added to this, the overall logistics of suppling product to many markets, due to shipping constraints, delayed shipments in the months of November and December with these orders fulfilled in the new year.

Gross profit margins

Gross product margins in Australian Dollars, reflecting regional and product sales mix, declined by 1.3% to 64.9%, compared to the record 66.2% result for the corresponding period last year. However, when adjusted for currency, gross margin was in-line with last year.

Operating expenses

Total operating expenses in Australian dollars decreased by 21.6% when compared to the previous corresponding period. Approximately 53% of the consolidated entity's total operating expenses relate to its offshore subsidiaries and after adjusting for currency movements and government assistance programs, operating expenses decreased by 12.9%.

SDI Limited Commentary - half-year results 31 December 2020

Balance sheet

The consolidated entity's net cash position increased $4.9 million for the six months after decreasing inventories by $2.6 million, eliminating debt of $1.5 million, planned investment in plant and equipment of $0.9 million and product development expenditure of $1.0 million. The Company has unused bank facilities of $10 million.

The consolidated entity received $2.4 million from Jobkeeper payments in the six months ending 31 December 2020. It is not eligible to receive further payments in the third quarter of the 2021 financial year.

The consolidated entity is undertaking a comprehensive review at its manufacturing footprint, including relocation, investment in automation, and review of its manufacturing processes to ensure it continues to operate efficiently and manage future growth.

Strategy and outlook

The Company continues to drive its strategic priorities. Firstly, the key product categories of Aesthetics and Whitening products are the focus for new product development, for achieving further manufacturing efficiencies and driving sales and marketing teams; secondly, on-going investment in research and development to release one to two products per year is on target; and finally, the consolidated entity's Amalgam replacement product is on schedule to be released in 2023.

It is expected that the second half of the 2021 financial year will show growth in Aesthetics products, continued strong growth in the Whitening products, and the on-going decline in Amalgam products. The Company will continue to invest in research and development with the aim of launching at least one new product in the next financial year.

Commenting on the outlook Samantha Cheetham said: *"*Although the future is uncertain, we are seeing a recovery in sales assisted by pent-up demand in many of the global markets we operate in. The logistics to supply our overseas markets continues to be challenging, but we are fortunate that we operate in over 100 countries therefore not replying on only a few markets. With these remaining markets getting closer to resuming activity, we are looking forward to the trends we are seeing to continue into the second half of the financial year".

Dividends

The Board of Directors has declared an interim fully franked ordinary dividend of 1.50 cents per share which is 11.1% higher than the previous interim dividend.

The Board has decided that the Company's Dividend Reinvestment Plan ('DRP') will not be offered to Shareholders for these dividend payments.

About SDI Limited

Founded in 1972 and publicly listed on the Australian Securities Exchange in 1985, SDI Limited is a leading dental technology company that conducts research and development, manufacturing, and marketing of specialist dental materials. SDI's products combine innovation and excellence to provide the ideal restorative materials for the dental profession.

All of SDI's products are manufactured in Victoria, Australia. SDI's products are distributed through distributors and retailers in over 100 countries throughout the world. SDI has offices and warehouses in Australia, USA, Germany, and Brazil.

SDI Limited Contents 31 December 2020

Appendix 4D	5
Directors' report	8
Auditor's independence declaration	10
Consolidated statement of profit or loss and other comprehensive income	11
Consolidated statement of financial position	12
Consolidated statement of changes in equity	13
Consolidated statement of cash flows	14
Notes to the consolidated financial statements	15
Directors' declaration	21
Independent auditor's review report to the members of SDI Limited	22

4

SDI Limited Appendix 4D Half-year report

1. Company details

Name of entity:	SDI Limited
ABN:	27 008 075 581
Reporting period:	For the half-year ended 31 December 2020
Previous period:	For the half-year ended 31 December 2019

2. Results for announcement to the market

Dividends		Amount persecurityCents	Frankedamount persecurityCents
Profit for the half-year attributable to the owners of SDI Limited	up	30.9% to	4,578
Profit from ordinary activities after tax attributable to the owners of SDILimited	up	30.9% to	4,578
Revenues from ordinary activities	down	8.0% to	36,764
			$'000

Final dividend for the year ended 30 June 2020 paid on 21 September 2020 0.50 0.50

On 18 February 2021, the Directors declared an interim franked dividend of 1.50 cents per share to be paid on 23 April 2021. This equates to a total estimated distribution of $1,783,000 based on the number of ordinary shares on issue as at 31 December 2020. The financial effect of dividends declared after the reporting date is not reflected in the 31 December 2020 financial statements and will be recognised in subsequent financial reports.

Comments

The profit for the consolidated entity after providing for income tax amounted to $4,578,000 (31 December 2019: $3,497,000).

Earnings before interest, tax, depreciation and amortisation ('EBITDA') increased by 21.8% to $8,674,000 (31 December 2019: $7,119,000).

EBITDA is a financial measure which is not prescribed by Australian Accounting Standards ('AAS') and represents the profit under AAS adjusted for specific items.

The following table summarises key reconciling items between statutory profit after tax and EBITDA:

	Consolidated
	31 Dec 2020$'000	31 Dec 2019$'000
Profit after tax	4,578	3,497
Add: taxation	1,732	1,456
Add: interest expense	52	41
Less: interest income	(2)	(6)
Add: depreciation and amortisation	2,314	2,131
EBITDA	8,674	7,119

Further information on the results is detailed in the 'Commentary on half-year results' included in this report.

3. Net tangible assets

	ReportingperiodCents	PreviousperiodCents
Net tangible assets per ordinary security	43.69	41.58

4. Control gained over entities

Not applicable.

5. Dividends

Current period

	Amount persecurityCents	Frankedamount persecurityCents
Final dividend for the year ended 30 June 2020 paid on 21 September 2020	0.50	0.50
Previous period	Amount persecurityCents	Frankedamount persecurityCents
Final dividend for the year ended 30 June 2019 paid on 22 August 2019Interim dividend for the year ended 30 June 2020 paid on 17 April 2020	1.501.35	1.501.35

6. Dividend reinvestment plans

The following dividend or distribution plans are in operation:

The Company has a Dividend Reinvestment Plan ('DRP'). However, the Directors have decided that the DRP will not be offered to Shareholders for the dividend payments.

7. Audit qualification or review

The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Report.

8. Attachments

The Interim Report of SDI Limited for the half-year ended 31 December 2020 is attached.

9. Signed

Authorised by the Board of Directors.

SDI Limited Appendix 4D Half-year report

Signed ___________________________ Date: 18 February 2021

Samantha Jane Cheetham Managing Director Melbourne

SDI Limited Directors' report 31 December 2020

The Directors present their report, together with the financial statements, on the consolidated entity consisting of SDI Limited (referred to hereafter as the 'Company', 'SDI' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2020 (referred to hereafter as the 'consolidated entity').

Directors

The following persons were Directors of SDI Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

Jeffery James Cheetham O.A.M - Chairman Samantha Jane Cheetham John Joseph Slaviero Dr Geoffrey Macdonald Knight Gerald Allan Bullon Cameron Neil Allen Gerard Desmond Kennedy

Alternate Director

Pamela Joy Cheetham (alternate for Jeffery James Cheetham)

Principal activities

During the financial half-year, the principal activities of the consolidated entity consisted of the manufacture and distribution of dental restorative materials, whitening systems, other dental materials and product research and development.

Dividends

Dividends paid during the financial half-year were as follows:

	Consolidated
	31 Dec 2020$'000	31 Dec 2019$'000
Final dividend for the year ended 30 June 2020 of 0.5 cents (2019: 1.5 cents) per ordinary
share	594	1,783

On 18 February 2021, the Directors declared an interim franked dividend of 1.50 cents per share to be paid on 23 April 2021. This equates to a total estimated distribution of $1,783,000 based on the number of ordinary shares on issue as at 31 December 2020. The financial effect of dividends declared after the reporting date is not reflected in the 31 December 2020 financial statements and will be recognised in subsequent financial reports.

Review of operations

The profit for the consolidated entity after providing for income tax amounted to $4,578,000 (31 December 2019: $3,497,000).

Highlights of the results from operations for the financial half-year ended 31 December 2020 are provided below:

Net profit after tax increased by 30.9% to $4,578,000 compared to $3,497,000 for the previous half-year. Profit before tax increased by 27.4% to $6,310,000 compared to $4,953,000 for the previous half-year.

Earnings per share for the half-year ended 31 December 2020 increased by 0.91 cents to 3.85 cents compared to 2.94 cents for the same period last half-year.

Earnings before interest, taxation, depreciation and amortisation ('EBITDA') is a financial measure which is not prescribed by Australian Accounting Standards ('AAS') and represents the profit under AAS adjusted for specific items.

EBITDA increased by 21.8% to $8,674,000 (31 December 2019: $7,119,000).

SDI Limited Directors' report 31 December 2020

The following table summarises key reconciling items between statutory profit after tax and EBITDA:

		Consolidated
	31 Dec 2020$'000	31 Dec 2019$'000
Profit after tax	4,578	3,497
Add: taxationAdd: interest expense	1,73252	1,45641
Less: interest incomeAdd: depreciation and amortisation	(2)2,314	(6)2,131
EBITDA	8,674	7,119

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the consolidated entity during the financial half-year.

Rounding of amounts

The Company is of a kind referred to in ASIC Corporations (Rounding in Financial / Directors' Reports) Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors' report.

This report is made in accordance with a resolution of Directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the Directors

Samantha Jane Cheetham Managing Director

___________________________

18 February 2021 Melbourne

Deloitte Touche Tohmatsu ABN 74 490 121 060

477 Collins Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 9671 7001 www.deloitte.com.au

18 February 2021

The Board of Directors SDI Limited 5-9 Brunsdon Street BAYSWATER VIC 3153

Dear Board Members

SDI Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of SDI Limited.

As lead audit partner for the review of the financial statements of SDI Limited for the half-year ended 31 December 2020, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• (ii) any applicable code of professional conduct in relation to the review.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Anneke du Toit Partner Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Asia Pacific Limited and the Deloitte Network

SDI Limited Consolidated statement of profit or loss and other comprehensive income For the half-year ended 31 December 2020

	Consolidated
	Note	31 Dec 2020$'000	31 Dec 2019$'000
RevenueSales revenue	4	36,762	39,963
Cost of goods sold		(12,920)	(13,502)
Gross profit		23,842	26,461
Other (loss)/gainInterest income	5	(1,004)2	(413)6
ExpensesSelling and administration expensesResearch and development costsImpairment of receivablesOther expensesFinance costs	6	(14,692)(807)(23)(956)(52)	(19,255)(901)(22)(882)(41)
Profit before income tax expense		6,310	4,953
Income tax expense		(1,732)	(1,456)
Profit after income tax expense for the half-year attributable to the owners ofSDI Limited		4,578	3,497
Other comprehensive income
Items that may be reclassified subsequently to profit or lossExchange differences arising on translation of foreign controlled entities		(840)	(94)
Other comprehensive income for the half-year, net of tax		(840)	(94)
Total comprehensive income for the half-year attributable to the owners of SDILimited		3,738	3,403
		Cents	Cents
Basic earnings per shareDiluted earnings per share	77	3.853.85	2.942.94

SDI Limited Consolidated statement of financial position As at 31 December 2020

			Consolidated
	Note	31 Dec 2020$'000	30 June 2020$'000
Assets
Current assets
Cash and cash equivalents		11,059	6,153
Trade and other receivables	8	13,135	9,605
Inventories		18,077	20,656
Current tax asset		-	850
Prepayments		1,154	1,780
Total current assets		43,425	39,044
Non-current assets
Trade and other receivables	8	775	642
Property, plant and equipment		19,262	19,225
Right-of-use assets		824	1,142
Intangibles		25,072	24,752
Total non-current assets		45,933	45,761
Total assets		89,358	84,805
Liabilities
Current liabilities
Trade and other payables		5,698	3,364
Borrowings		-	1,500
Lease liabilities		350	441
Provision for income tax		198	69
Employee benefitsTotal current liabilities		2,7549,000	2,4087,782
Non-current liabilitiesLease liabilities		549	686
Deferred tax liability		2,639	2,334
Employee benefits		236	213
Total non-current liabilities		3,424	3,233
Total liabilities		12,424	11,015
Net assets		76,934	73,790
EquityIssued capital	9	12,890	12,890
Reserves		663	1,503
Retained profits		63,381	59,397
Total equity		76,934	73,790

SDI Limited Consolidated statement of changes in equity For the half-year ended 31 December 2020

Consolidated	Issuedcapital$'000	Reserves$'000	Retainedprofits$'000	Total equity$'000
Balance at 1 July 2019	12,890	1,647	58,548	73,085
Profit after income tax expense for the half-yearOther comprehensive income for the half-year, net of tax	--	-(94)	3,497-	3,497(94)
Total comprehensive income for the half-year	-	(94)	3,497	3,403
Transactions with owners in their capacity as owners:Dividends paid (note 10)	-	-	(1,783)	(1,783)
Balance at 31 December 2019	12,890	1,553	60,262	74,705
Consolidated	Issuedcapital$'000	Reserves$'000	Retainedprofits$'000	Total equity$'000
Balance at 1 July 2020	12,890	1,503	59,397	73,790
Profit after income tax expense for the half-yearOther comprehensive income for the half-year, net of tax	--	-(840)	4,578-	4,578(840)
Total comprehensive income for the half-year	-	(840)	4,578	3,738
Transactions with owners in their capacity as owners:Dividends paid (note 10)	-	-	(594)	(594)
Balance at 31 December 2020	12,890	663	63,381	76,934

SDI Limited Consolidated statement of cash flows For the half-year ended 31 December 2020

	Consolidated
	Note	31 Dec 2020$'000	31 Dec 2019$'000
Cash flows from operating activities
Receipts from customers		29,065	43,746
Payments to suppliers and employees		(21,130)	(36,826)
		7,935	6,920
Interest received		2	6
Other revenue		2,427	(2)
Interest and other finance costs paid		(52)	(41)
Income taxes paid		(448)	(2,164)
Net cash from operating activities		9,864	4,719
Cash flows from investing activities
Payments for property, plant and equipment		(943)	(1,754)
Payments for intangibles		(1,421)	(1,702)
Proceeds from disposal of property, plant and equipment		35	187
Net cash used in investing activities		(2,329)	(3,269)
Cash flows from financing activities
Repayment of lease liabilities		(228)	-
Dividends paid	10	(594)	(1,783)
Repayment of borrowings		(1,500)	-
Net cash used in financing activities		(2,322)	(1,783)
Net increase/(decrease) in cash and cash equivalents		5,213	(333)
Cash and cash equivalents at the beginning of the financial half-year		6,153	6,481
Effects of exchange rate changes on cash and cash equivalents		(307)	(90)
Cash and cash equivalents at the end of the financial half-year		11,059	6,058

Note 1. General information

The financial statements cover SDI Limited as a consolidated entity comprising of SDI Limited ('Company' or 'parent entity') and its subsidiaries (collectively referred to as the 'consolidated entity'). The financial statements are presented in Australian dollars, which is SDI Limited's functional and presentation currency.

SDI Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are:

5 - 9 Brunsdon Street 3 - 15 Brunsdon Street Bayswater VIC 3153 Bayswater VIC 3153

Registered office Principal place of business

A description of the nature of the consolidated entity's operations and its principal activities are included in the Directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of Directors, on 18 February 2021. The Directors have the power to amend and reissue the financial statements.

Note 2. Significant accounting policies

These general purpose financial statements for the interim half-year reporting period ended 31 December 2020 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2020 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except as stated below.

New or amended Accounting Standards and Interpretations adopted

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are relevant to its operations and effective for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Note 3. Operating segments

Identification of reportable operating segments

The consolidated entity's operations consist of the manufacture of dental restorative products, tooth whitening systems and small dental equipment for sale to dental distributors, dental dealers and dentists worldwide.

Operating segments are determined using the 'management approach', where the information presented is on the same basis as the internal reports reviewed by the Board of Directors (identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. The consolidated entity comprises four separate reportable operating segments which are primarily identified on the basis of subsidiary companies in different geographical markets.

Reportable segments The consolidated entity's reportable segments are as follows: Australia: SDI Limited and SDI Dentech Innovations Pty Limited from 1 July 2019. Europe: SDI Germany GmbH (Germany) and SDI Dental Innovations Limited (United Kingdom). USA: SDI (North America), Inc. Brazil: SDI Brasil Industria e Comercio Ltda

Note 3. Operating segments (continued)

Intersegment transactions

The segment revenues, expenses and result include transfers between segments. The pricing of the 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.

Intersegment receivables, payables and loans

Intersegment loans are initially recognised at the consideration received. Intersegment loans receivable and loans payable that earn or incur non-market interest are not adjusted to fair value based on market interest rates. Intersegment loans are eliminated on consolidation.

Major customers

The consolidated entity has a number of customers to whom it sells products. No single customer represents 10% or more of the consolidated entity's revenue.

Operating segment information

Consolidated - 31 Dec 2020	Australia$'000	Europe$'000	USA$'000	Brazil$'000	Total$'000
RevenueSales to external customers	13,458	12,032	9,179	2,093	36,762
Intersegment sales	7,738	1,286	-	-	9,024
Total sales revenue	21,196	13,318	9,179	2,093	45,786
Total segment revenue	21,196	13,318	9,179	2,093	45,786
Intersegment eliminations					(9,024)
Total revenue					36,762
Segment results before tax and
adjustments below	6,552	499	379	58	7,488
Intersegment adjustments	1,185	-	-	-	1,185
Depreciation and amortisation	(1,977)	(190)	(76)	(70)	(2,313)
Interest revenue	2	-	-	-	2
Finance costs	(42)	(8)	(1)	(1)	(52)
Profit/(loss) before income tax expense	5,720	301	302	(13)	6,310
Income tax expense					(1,732)
Profit after income tax expense					4,578
Assets
Segment assets	79,956	10,038	8,451	4,639	103,084
Intersegment eliminations					(13,726)
Total assets					89,358
Liabilities
Segment liabilities	9,535	6,510	2,954	5,244	24,243
Intersegment eliminations					(11,819)
Total liabilities					12,424

Note 3. Operating segments (continued)

Consolidated - 31 Dec 2019	Australia$'000	Europe$'000	USA$'000	Brazil$'000	Total$'000
Revenue
Sales to external customers	15,380	12,835	8,855	2,893	39,963
Intersegment sales	11,579	2,578	-	-	14,157
Total sales revenue	26,959	15,413	8,855	2,893	54,120
Total segment revenue	26,959	15,413	8,855	2,893	54,120
Intersegment eliminationsTotal revenue					(14,157)39,963
Segment results before tax and
adjustments below	5,154	722	311	(202)	5,985
Intersegment eliminations	1,134	-	-	-	1,134
Depreciation and amortisation	(1,807)	(236)	(47)	(41)	(2,131)
Interest revenueFinance costs	2(1)	-(40)	1-	3-	6(41)
Profit/(loss) before income tax expense	4,482	446	265	(240)	4,953
Income tax expense					(1,456)
Profit after income tax expense					3,497
Consolidated - 30 June 2020
Assets
Segment assets	76,789	8,428	6,399	5,423	97,039
Intersegment eliminations					(12,234)
Total assets					84,805
Liabilities
Segment liabilities	9,095	4,983	456	6,057	20,591
Intersegment eliminationsTotal liabilities					(9,576)11,015
Note 4. Sales revenue
				Consolidated
				31 Dec 2020$'000	31 Dec 2019$'000
Sales revenue				36,762	39,963
				Consolidated
				31 Dec 2020	31 Dec 2019
				$'000	$'000
Major product lines
Aesthetics				16,325	18,242
Amalgam				5,224	8,308
EquipmentWhitening				2,81912,394	2,76210,651
				36,762	39,963
Timing of revenue recognition
Goods transferred at a point in time				36,762	39,963

Note 4. Sales revenue (continued)

Refer to note 3 for disaggregation of revenue from contracts with customers based on geographical regions.

Note 5. Other (loss)/gain

		Consolidated
	31 Dec 2020$'000	31 Dec 2019$'000
Net foreign exchange lossNet gain on disposal of property, plant and equipment	(1,028)24	(454)41
Other (loss)/gain	(1,004)	(413)

During the half-year, the consolidated entity received $3,260,000 from JobKeeper support payments from the Australian Government which are passed on to eligible employees. These have been recognised as government grants in the financial statements and recorded against the related employee benefits expense.

Note 6. Expenses

	Consolidated
	31 Dec 2020$'000	31 Dec 2019$'000
Profit before income tax includes the following specific expenses:
DepreciationLand and buildingsPlant and equipmentLand and buildings right-of-use assets	54929230	56845223
Total depreciation	1,213	1,124
AmortisationProduct development costsIntellectual property	718383	707300
Total amortisation	1,101	1,007
Total depreciation and amortisation	2,314	2,131
Finance costsInterest and finance charges paid/payable on borrowingsInterest and finance charges paid/payable on lease liabilities	4210	41-
Finance costs expensed	52	41

	Consolidated
	31 Dec 2020$'000	31 Dec 2019$'000
Profit after income tax attributable to the owners of SDI Limited	4,578	3,497
	Number	Number
Weighted average number of ordinary shares used in calculating basic earnings per share	118,865,530	118,865,530
Weighted average number of ordinary shares used in calculating diluted earnings per share	118,865,530	118,865,530
	Cents	Cents
Basic earnings per shareDiluted earnings per share	3.853.85	2.942.94
Note 8. Trade and other receivables
	Consolidated
	31 Dec 2020$'000	30 June 2020$'000
Current assets
Trade receivables	12,628	8,973
Less: Allowance for expected credit losses	(118)12,510	(357)8,616
Other receivables	625	989
	13,135	9,605
Non-current assets
Other receivables	775	642
	13,910	10,247

Allowance for expected credit losses

The consolidated entity has recognised $23,000 (31 December 2019: $22,000) in profit or loss in respect of the expected credit losses for the half-year ended 31 December 2020.

Other receivables relate to prepaid taxes and government grant subsidies receivable.

		Expected credit loss rate		Carrying amount		Allowance for expectedcredit losses
	31 Dec 2020	30 June 2020	31 Dec 2020	30 June 2020	31 Dec 2020	30 June 2020
Consolidated	%	%	$'000	$'000	$'000	$'000
Not overdue	0.18%	0.24%	8,595	5,921	15	14
1 to 4 months overdue	0.18%	0.24%	3,438	1,902	6	5
Over 4 months overdue	16.22%	29.39%	595	1,150	97	338
			12,628	8,973	118	357

	Consolidated
	31 Dec 2020Shares	30 June 2020Shares	31 Dec 2020$'000	30 June 2020$'000
Ordinary shares - fully paid	118,865,530	118,865,530	12,890	12,890

Ordinary shares

Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders should the Company be wound up, in proportions that consider both the number of shares held and the extent to which those shares are paid up. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll, each share shall have one vote.

Share buy-back There is no current on-market share buy-back.

Note 10. Dividends

Dividends paid during the financial half-year were as follows:

	Consolidated
	31 Dec 2020$'000	31 Dec 2019$'000
Final dividend for the year ended 30 June 2020 of 0.5 cents (2019: 1.5 cents) per ordinary
share	594	1,783

On 18 February 2021, the Directors declared an interim franked dividend of 1.50 cents per share to be paid on 23 April 2021. This equates to a total estimated distribution of $1,783,000 based on the number of ordinary shares on issue as at 31 December 2020. The financial effect of dividends declared after the reporting date is not reflected in the 31 December 2020 financial statements and will be recognised in subsequent financial reports.

Note 11. Fair value measurement

The Directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values.

Note 12. Contingent liabilities

The consolidated entity had no contingent liabilities as at 31 December 2020 and 30 June 2020.

Note 13. Events after the reporting period

Apart from the dividend declared as disclosed in note 10, no other matter or circumstance has arisen since 31 December 2020 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

SDI Limited Directors' declaration 31 December 2020

In the Directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;
• the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 2020 and of its performance for the financial half-year ended on that date; and
• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of Directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the Directors

___________________________

Samantha Jane Cheetham Managing Director

18 February 2021 Melbourne

Deloitte Touche Tohmatsu ABN 74 490 121 060

477 Collins Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

Independent Auditor's Review Report to the members of SDI Limited

Conclusion

We have reviewed the accompanying half-year financial report of SDI Limited (the "Entity") and its subsidiaries (the "Group"), which comprises the condensed consolidated statement of financial position as at 31 December 2020, and the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of cash flows and the condensed consolidated statement of changes in equity for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the Director's Declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of the Group is not in accordance with the Corporations Act 2001, including:

• (a) giving a true and fair view of the Group's financial position as at 31 December 2020 and of its performance for the half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor's Responsibilities for the Review of the Half-year Financial Report section of our report. We are independent of the Group in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Entity, would be in the same terms if given to the directors as at the time of this auditor's review report.

Directors' Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Liability limited by a scheme approved under Professional Standards Legislation.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group's financial position as at 31 December 2020 and its performance for the halfyear ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

DELOITTE TOUCHE TOHMATSU

Anneke du Toit Partner Chartered Accountants Melbourne, 18 February 2021