Interim Results

Scientific Digital Imaging plc

("SDI", the "Company" or the "Group")

(AIM: SDI)

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS TO 31 OCTOBER 2016

The Board of Scientific Digital Imaging plc, the AIM quoted group focused on the design and manufacture of scientific and technology products for use by the life science, healthcare, astronomy, consumer manufacturing and art conservation markets, is pleased to announce its unaudited interim results for the six months ended 31 October 2016.

Highlights

· Revenue increased by 33% to £4,902,000 (2015: £3,671,000)

· Profit before taxation for the period increased to £410,000 (2015: £13,000)

· Adjusted profit before taxation* for the period increased to £421,000 (2015: £173,000)

· Gross margin increased to 63.6% (2015: 58.0%)

· Sentek continued to contribute strong sales growth and profitability

· Post period event - the acquisition of a manufacturer and supplier of chemical dosing and control systems, Astles Control Systems Limited on 12 January 2017 for an initial consideration of £3.446 million. At the same time, SDI announced an equity fundraising of £3.1 million before expenses.

* before acquisition costs, costs of reorganisation, and share based payments

Ken Ford, Chairman of SDI, commented:

"It has been a positive performance in the first half of the year, and the outlook for the full year is strong. SDI now has a growing portfolio of profitable businesses which are providing the Group with increased and sustained profitability. We have been particularly pleased with the performance of Sentek, the manufacturer of electrochemical sensors that we acquired in October 2015, and we will continue to grow as we seek to diversify our existing product range and widen our addressable market.'

Enquiries

Scientific Digital Imaging plc 01223 727144

Ken Ford, Chairman

Mike Creedon, CEO

www.scientificdigitalimaging.com 

finnCap Ltd 020 7220 0500

Ed Frisby/Simon Hicks - Corporate Finance

Mia Gardner- Corporate Broking

JW Communications 07818 430877

Julia Wilson - Investor & Public Relations

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

Copies of the interim report are being sent to shareholders and can also be viewed on the Company's website: www.scientificdigitalimaging.com

About SDI:

Scientific Digital Imaging plc designs and manufactures scientific and technology products for use in applications including life sciences, healthcare, astronomy, consumer manufacturing and art conservation. SDI intends to continue to grow through its own technology advancements as well as strategic, complementary acquisitions.

SDI operates through four main brands:

Synoptics

Synoptics designs and manufactures innovative systems for use in the life science and clinical markets. The Company exploits digital imaging technologies for a range of applications and offers its products through three brands:

· Syngene - manufactures equipment for life scientists to image and analyse gels and blots used for DNA and protein analysis

· Synbiosis - produces equipment for microbiologists to automate microbial colony counting and inhibition zone analysis

· Synoptics Health - focuses on imaging proteins on surgical instruments in the hospital and clinical environments using the ProReveal system.

Artemis CCD

Artemis designs and manufactures sensitive cameras for deep-sky astronomical and life science imaging applications under the Atik brand.

Opus Instruments

Opus designs and manufactures Osiris, an infrared camera, which is used to examine and authenticate works of art.

Sentek

Sentek manufactures and sells both reusable and single-use electrodes for the measurement of pH and conductivity of aqueous solutions. Applications range from laboratory use, to monitoring food, beverage and biologics-based pharmaceuticals manufacturing, as well as personal care and leisure applications.

Chairman's statement

OVERVIEW

In the six-month period ended 31 October 2016, SDI has continued to successfully increase the profitability of the business.

Total revenue for the period increased by over 33% to £4,902,000 in the six months to 31 October 2016 (an increase of £1,231,000, relative to revenue of £3,671,000 for the six months to 31 October 2015). This increase predominantly came from Atik, Opus Instruments and Sentek with the latter becoming an important stream of revenue and profitability since being acquired in October 2015 fulfilling the Board's predicted positive impact on Group trading.

To ensure that Synoptics continues to thrive, we have appointed Dr Brian Stammers, an experienced life science expert, as CEO for Synoptics. Having worked previously with SDI through the UK Trade & Investment (UKTI) to improve the commercial success of the Synbiosis Division of Synoptics, he is reshaping the strategic direction of the Synoptics business and driving the international sales and marketing effort.

Artemis CCD also continues to report increased sales and profitability through direct and OEM camera sales.

Basic earnings per share was 0.64p (2015: 0.04p) and fully diluted earnings per share was 0.63p (2015: 0.04p).

As at 31 October 2016, the Group has net cash of £1,198,000 which will be used to advance SDI's own technologies as well as the acquisition of new companies with complementary technologies and it is hoped further announcements will be made in 2017 that will continue to support the expansion of the Company.

PRODUCT PORTFOLIO

Syngene, which remains the largest of the Synoptics brands, has had continued investment in order to improve software and hardware in several of its products and expects to launch new systems in 2017.

During the period, Syngene has introduced an updated version of its GeneSys image capture software. This can now acquire stain-free protein gel images and will help update the G:BOX and NuGenius systems to match the capabilities of Syngene's major competitor. North America and Asia-Pac regions remain major target markets for Syngene growth. To remain competitive in these markets a new version of the high-end G:BOX imager is being introduced in early 2017.

Synbiosis has broadened its portfolio to include additional automation for the food and clinical microbiology market. A new Minimum Inhibitory Concentration (MIC) point software module to measure antibiotic resistance has been released, which further extends the application of the ProtoCOL 3 and ChromoZona in clinical markets. This has resulted in sales growth ahead of budget. As a result of the strong worldwide drive to develop and test new antibiotics in response to increasing concerns about antimicrobic resistance, Synbiosis believes sales of its automation for this sector will continue to grow in 2017.

Synoptics Health has continued to sell ProReveal, a fluorescence test to detect proteins on re-usable surgical instruments in North American hospitals. These hospitals are using the ProReveal system to optimise the performance of their washer-disinfection process. The uptake of the test has been slower by the NHS in the UK. However, since the UK Department of Health (DoH) published additional new guidelines in July 2016 which provide the limit of acceptable protein contamination on re-usable surgical instruments (https://www.gov.uk/government/publications/management-and-decontamination-of-surgical-instruments-used-in-acute-care), there has been increased interest in ProReveal. Currently, it is the only available CE-marked instrument capable of measuring less than 50ng of protein and thus meeting DoH requirements.

During the period, Artemis CCD delivered better than expected sales and profitability. The business continues to develop market-led new products and launched the Atik 16200 camera in 2016. This high-specification CCD camera, which can be fitted to a range of telescopes, is proving popular with astronomers and there are already forward orders for the Atik 16200 which will be delivered in 2017. We continue to invest in product focused R&D and plan to bring further new products and developments to market in 2017.

The first six months have seen a significant increase in Atik sales to OEM customers. These mainly operate in the life science area where Atik cameras are used to detect end points including fluorescence and luminescence in a range of analysis techniques. Atik is able to work closely with such OEM customers bringing their experience and knowledge of low light detection to help win design-ins. We are expanding our production team in Lisbon to keep up with demand from these repeat orders and remain committed to controlling production costs. The Board expects OEM sales will continue to make a positive contribution to trading.

Opus Instruments' Osiris camera sales continue to be on budget, supported by additional sales of the Macro Lens and Illumination Kit accessories. With servicing of existing cameras and new models now being developed at our Norwich site, the Board believes the Osiris camera can be produced more cost-effectively over time. Opus is looking at ways to develop the product portfolio, including the possibility of enhanced performance versions of the existing Osiris.

Sentek reported strong growth in the first half of the year for its single-use electrode for use in bioprocessing applications. Automated systems in pharmaceuticals and biotech companies are becoming more widely used, and Sentek expects revenues from the single-use electrodes required by these systems to continue to grow. The company has been brought into the Group with no disruption and we have invested in a new website that is reaping rewards through the generation of new prospects (http://www.sentek.co.uk/).

ACQUISITIONS

SDI acquired Astles Control Systems Limited on 12 January 2017. The company, a manufacturer and supplier of chemical dosing and control systems, based in the UK, has growing revenues (five-year revenue CAGR of 17%) and is a profitable business (five-year PBT CAGR of 22%), with 70-80% of sales exported globally. The maximum consideration of £4.8m payable will be financed by the £3.1m placing, the issue of £100,000 in SDI shares to the vendor, £850,000 of existing cash as well as drawing down £750,000 on a new five-year term loan.

SDI is actively seeking further profitable scientific and technology acquisition targets in the £1m to £10m price range to continue its buy and build strategy.

OUTLOOK

SDI now has a growing portfolio of profitable businesses which are providing the Group with increased profitability. The Board expects the Company to continue to make good progress over the remainder of the financial year as it continues to pursue an organic and acquisitive growth strategy.

Ken Ford, Chairman

23 January 2017

Consolidated income statement

Unaudited for the six months ended 31 October 2016

Consolidated statement of comprehensive income

Unaudited for the six months ended 31 October 2016

Consolidated balance sheet

Unaudited at 31 October 2016

Consolidated statement of cash flows

Unaudited for the six months ended 31 October 2016

Consolidated statement of changes in equity

Unaudited for the six months ended 31 October 2016

Notes to the interim financial statements

Unaudited for the six months ended 31 October 2016

The accompanying accounting policies and notes form an integral part of these interim financial statements.

Reporting entity

Scientific Digital Imaging plc (the "Company"), a public limited company, is the Group's ultimate parent. It is registered in England and Wales. The consolidated interim financial statements of the Company for the period ended 31 October 2016 comprise the Company and its subsidiaries (together referred to as the "Group").

Basis of preparation

The unaudited consolidated interim financial statements are for the six months ended 31 October 2016. These interim financial statements have been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively EU IFRS). The financial information for the year ended 30 April 2016 is based upon the audited statutory accounts for that year. The consolidated interim financial information has been prepared on the historical cost basis. The consolidated interim financial statements are presented in British pounds (£), which is also the functional currency of the ultimate parent company.

The consolidated interim financial information was approved by the Board of Directors on 23 January 2017.

The financial information set out in this interim report does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The figures for the year ended 30 April 2016 have been extracted from the statutory financial statements of Scientific Digital Imaging plc which have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006. The financial information for the six months ended 31 October 2016 and for the six months ended 31 October 2015 has not been audited.

1. Principal accounting policies

The principal accounting policies adopted in the preparation of the condensed consolidated interim information are consistent with those followed in the preparation of the Group's financial statements for the year ended 30 April 2016.

The accounting policies have been applied consistently throughout the Group the purposes of preparation of these interim financial statements.

2. Earnings per share

The calculation of the basic earnings per share is based on the profits attributable to the shareholders of Scientific Digital Imaging plc divided by the weighted average number of shares in issue during the year, excluding shares held by the Synoptics Employee Benefit Trust. All profit per share calculations relate to continuing operations of the Group.

The calculation of diluted earnings per share is based on the profits attributable to the shareholders of Scientific Digital Imaging plc divided by the weighted average number of shares in issue during the year, as adjusted for dilutive share options, dilutive deferred consideration and shares held by the Synoptics Employee Benefit Trust.

The reconciliation of average number of ordinary shares used for basic and diluted earnings is as below:

At 31 October 2016 206,000 share options are dilutive. At 31 October 2015 and 30 April 2016 all share options are non-dilutive. Share options could potentially dilute basic earnings per share in the future.

3. Borrowings

The Group utilises short-term facilities to finance its operation. The Group has one principal banker with an invoice discounting facility of up to £500,000. At the end of the period the Group had utilised £126,902 of this facility. SDI has subsequently given NatWest notice to terminate the facility.

Scientific Digital Imaging plc

Beacon HouseNuffield RoadCambridgeCB4 1TFUK

Telephone: +44 (0)1223 727144Fax: +44 (0)1223 727101

Email: [email protected]