Half Yearly Report

3D DIAGNOSTIC IMAGING PLC

("3D" or the "Company")

(AIM ticker 3DD)

Unaudited results

for the 12 months ended 30 June 2012

3D today announces its unaudited results for the 12 month period ended 30 June 2012.

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Chairman's Statement

The Company has recently changed its accounting reference date from 30 June to 31 December. As a consequence of this change, the current financial period has been extended to cover the eighteen month period from 1 July 2011 to 31 December 2012. In order to keep shareholders informed the Company has published a further set of unaudited accounts, covering the twelve month period to 30 June 2012.

I joined the board of 3D in December 2011 and became Non Executive Chairman in February 2012. I remain convinced that with the CarieScan PRO we have developed one of the most innovative dental diagnostic products available in the market place today. Unfortunately, this achievement on the product front has not been matched by the financial performance of the business in the period under review and the level of revenue generation has been very disappointing. It is taking considerably longer than the Directors anticipated for sales to gain the necessary traction. As a consequence of the low level of sales revenues the Company has continued to be loss making. I will outline below the steps that we have taken and the changes that we anticipate making in the near future.

The financial performance of the business in the period under review can be summarised as follows. Turnover in the twelve month period was £181,062 (6 months ended 31 December 2011: £67,739, 12 months ended 30 June 2011: £714,925). Operating loss for the period was £1,715,764 (6 months ended 31 December 2011: operating loss of £987,323, 12 months ended 30 June 2011: operating loss of £2,434,380). Net assets as at 30 June 2012 were £554,022 (as at 31 December 2011: £1,186,567, as at 30 June 2011: £835,032), and included cash resources of £253,568 (as at 31 December 2011: £1,071,827, as at 30 June 2011: £520,145).

This situation prompted the Board to undertake a fundamental review of the Company's cost base and to implement a radical cost cutting exercise.

One of the highest cost areas within any business is staff remuneration and as a part of the cost reduction exercise Graham Lay, the Chief Executive Officer, has reduced his salary by 60%, Oliver Cooke, the Chief Financial Officer, has reduced his salary by 80% and I have continued to waive my entitlement to remuneration in full. In addition a number of staff redundancies have been made and all of the remaining staff have reduced their salaries by an average of 25%.

The next largest costs are those associated with the Company's membership of a public market.

The Company's shares were admitted to trading on AIM in November 2010. One of the principal objectives of the Company's listing on AIM was to provide it with access to development capital as the business grew. However, it has become apparent that in the current market environment this objective cannot be met and as a consequence the Board no longer feels able to justify the continued costs associated with the Company's admission to trading on AIM. Therefore in August 2012 the Board announced its intention to seek shareholders consent to withdraw the Company's shares from trading on AIM.

However, since then the Board investigated various alternative options with the potential to deliver greater value to shareholders. In October 2012 the Board announced that it had resolved to move the ownership of the Group's operating business, CarieScan Limited, into a newly formed private company, 3D Diagnostic Imaging Limited ("3DIL"). Once this transfer has taken place, the shares in 3DIL will be gifted to 3D's present shareholders which will result in them owning the same number of shares in both 3D and in 3DIL as they currently own in 3D alone. As a consequence the future development of the operating business will take place in a lower cost, private company environment, with the same underlying shareholder ownership as at present.

Under the AIM Rules the disposal constitutes a fundamental change in business for 3D and requires shareholder approval. 3D shall remain listed on AIM but with no operating business and will become an investing company within the definition of the AIM Rules, with a natural resources focused investing policy. It is anticipated that shareholders will benefit in due course from 3D's future investment activity.

As a part of these proposals it is intended that two new directors, Donald Strang and Hamish Harris, will join the Board of the Company and that Graham Lay and I will step down from the Board. Oliver Cooke will remain on the Board as a Non-Executive director. A circular giving further details of these proposals and convening an extraordinary general meeting of the Company on 24 October 2012, at which to obtain shareholders consent for the proposals, has now been sent to shareholders for their consideration.

Upon completion of the proposals outlined above, the Board of 3DIL will seek to raise additional capital to finance the company's sales development operations and its other working capital requirements.

The Directors believe that these proposals are in the best interests of shareholders as they significantly reduce the cost base of the operating business, maintain the current ownership of that business and give shareholders an additional opportunity to recover value from their investment in the Company.

David Snow

Non-executive Chairman

12 October 2012

Group Income Statement (unaudited)

For the 12 months ended 30 June 2012

All of the revenues and loss above is derived from continuing operations.

There is no other income for this period, and therefore no separate statement of comprehensive income has been presented.

Group Statement of Changes in Equity (unaudited)

For the 12 months ended 30 June 2012

Group Statement of Financial Position (unaudited)

At 30 June 2012

Group Statement of Cash Flows (unaudited)

For the 12 months ended 30 June 2012

Notes to the Interim Financial Information (unaudited)

1. General Information

The condensed financial information for the 12 months to 30 June 2012 does not constitute statutory accounts for the purposes of Section 434 of the Companies Act 2006 and has not been audited or reviewed. No statutory accounts for the period have been delivered to the Registrar of Companies.

The condensed financial information in respect of the year ended 30 June 2011 has been produced using extracts from the statutory accounts for this period. Consequently, this does not constitute the statutory information (as defined in section 434 of the Companies Act 2006) for the year ended 30 June 2011, which was audited. The statutory accounts for this period have been filed with the Registrar of Companies. The auditors' report was unqualified and did not contain a statement under Sections 498 (2) or 498 (3) of the Companies Act 2006.

The Report was approved by the Directors on 12 October 2012 and will be available shortly on the Company's website at www.3ddiagnosticimaging.com.

2. Accounting Policies

Basis of preparation

The financial information has been prepared on the historical cost basis. The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement. This statement also includes a summary of the Group's financial position and its cash flows.

Basis of accounting

The Group's consolidated financial statements for the year ended 30 June 2011 were prepared in accordance with International Financial Reporting Standards (IFRSs). The 12 month report for the period ended 30June 2012 has been prepared in accordance with International Accounting Standards ("IAS") 34 "Interim Financial Reporting".

3. Tax

No deferred tax asset has been recognised in respect of tax losses due to the uncertainty of future profit streams in the UK. 

4. Loss Per Share and Dividends

No dividends have been paid during the 12 month period ended 30 June 2012.IAS 33 "Earnings per share" requires presentation of diluted earnings / (loss) per share when a company could be called upon to issue shares that would decrease profit or increase loss per share. For a loss making company with outstanding share options, loss per share would only be increased by the exercise of out of money options. Since it seems appropriate to assume that option holders would not exercise out of money options, no adjustment has been made to calculate the diluted loss per share on out of money share options.

Basic and diluted loss per share is calculated on the loss of the Group attributable to equity holders of the parent. 

5. Share Capital

The Company has one class of ordinary shares with a par value of 0.1p and which carry no right to fixed income.

6. Notes to the cash Flow Statement

7. Share Based Payments

The Group issues share-based benefits to employees. These share-based payments have been measured at their fair value at the date of grant and the fair value of expected shares is being expensed to the Income Statement on a straight-line basis over the vesting period. Fair value has been measured using the Black Scholes model and adjusted to reflect the most likely share vesting and exercise pattern. The impact on the accounting periods has been:

The cumulative provision for share-based payments of £137,503 (30 June 2011: £68,220) is shown as a reserve in the Group Statement of Financial Position.

8. Subsequent events

There have been no significant events after the balance sheet date which have not already been disclosed to the market.