Final Results

RNS Number : 5153P

Scientific Digital Imaging Plc

19 July 2010

 



19 July 2010

SCIENTIFIC DIGITAL IMAGING PLC

("SDI" or "the Group")

Final Results For The Year Ended 30 April 2010

 

The Board of Scientific Digital Imaging is pleased to announce its final results for the year ended 30 April 2010.  SDI designs, builds and sells scientific instruments based on digital imaging technology, predominantly for applications in the life sciences industry.

Financial Highlights

·      Revenue increased by 6.4% to £7.2m (2009: £6.8m)

·      Gross profit increased by 12.7% to £4.3m (2009: £3.8m)

·      Operating profit before currency losses £342k (2009: £268k)

·      Strong cash balance £762k  (2009: 756k)

·      Normalised earnings per share were 1.81 pence per share (2009: 1.07p)

Operational Highlights

·      Launch of major new product, ProtoCOL 2

·      Appointment of Ann Simon and Ken Ford as Non Executive Directors to the Board

·      Appointment of Mike Creedon as Chief Financial Officer

·      Development of a new software product for astronomical images

·      Launch of the Atik range in the US

Commenting on the results, Harry Tee CBE, Chairman of SDI said, "For the fourth consecutive year we have increased revenues whilst retaining a healthy balance sheet and a strong cash position.

"Additionally, the Group has demonstrated that its markets are largely resilient to recessionary pressures.

"The Board continues to look at possible acquisition targets whilst being cautiously optimistic that its markets will remain stable and that the Group's strategy will result in good medium-term growth."

--ENDS--

FOR FURTHER INFORMATION

Scientific Digital Imaging plc                                01223 727144

Harry Tee CBE, Chairman

Phil Atkin, CEO

www.scientificdigitalimaging.com

Bishopsgate Communications                                020 7562 3350

Gemma O'Hara

Siobhra Murphy

[e-mail]

finnCap Ltd.                                                         020 7600 1658

Sarah Wharry

Note to Editors

Scientific Digital Imaging plc

SDI plc is focused on the application of digital imaging technology to the needs of the scientific community. The principal subsidiary is Synoptics, which designs and manufactures special-purpose instruments for use in the life sciences. In October 2008 SDI acquired the entire share capital of Artemis and Perseu, companies (now known as "Atik") that design and manufacture high-sensitivity cameras for both astronomical and life sciences applications and whose products are used in instruments manufactured by Synoptics.

SDI, through its subsidiaries, offers a range of digital imaging solutions and intends to acquire other companies that are capable of contributing one or more key elements to the solutions required including an in-depth understanding of the applications in the marketplace, the ability to engineer complete systems to address such applications and the provision of key, high-performance components such as cameras.

Chairman's statement

I am pleased to report on a period in which we have successfully concentrated on growing the existing Group companies organically, whilst continuing in our efforts to acquire further complementary companies.

Financial results

Turnover for the period rose to £7.2m (2009: £6.8m), an increase of 6.4%, despite subdued economic conditions.

Operating profit for the year before currency losses was £342k (2009: £268k also adjusted for AIM admission expenses).  After these, net trading profit for the year was £319k (2009: £106k).  Basic earnings per share were 1.67p and fully diluted 1.46p, up from 0.05p and 0.04p respectively at the end of the previous period.  Normalised earnings per share for the Group, excluding currency losses and AIM admission expenses were 1.81p (2009: 1.07p).

Cash of £331k (2009: 341k) was generated by operating activities. A convertible loan stock, issued to fund the Group's admission to AIM, stood at £352k at the end of the period (2009: 344k), and total borrowings stood at £422k (2009: 417k).  Cash and cash equivalents were £762k at the end of the period (2009: £756k).  The Group's net cash position was substantially unchanged at £340k (2009: £339k).

Strategy

The Board continues to pursue a focused strategy of acquiring digital imaging companies in the life sciences sector and in other scientific markets, as well as seeking to generate organic growth. The Board believes there are many businesses operating within the market, a number of which have not achieved critical mass, and that this presents an ideal opportunity for consolidation. This 'buy and build' strategy will be primarily focused within Europe but, where opportunities exist, acquisitions in the United States and elsewhere will also be considered.

Board

Alf Vaisey retired from the Board at the end of March 2010, having provided valuable assistance to the Company's development, and especially to its establishment on AIM, since joining the Board in August 2008.  We thank him for his contributions and wish him well.

In March 2010 we were joined by two experienced Non-Executive Directors, Ann Simon and Ken Ford.  This was followed by the addition of Mike Creedon as Chief Financial Officer in May 2010.  Each of them brings a wealth of experience and expertise across the financial, technology and scientific sectors.

Current Trading and Outlook

The global economic climate remains unstable and uncertain.  Over recent periods, however, the Board's belief that the Group is relatively resilient to such uncertainty has been vindicated.  The customers of the Group's principal subsidiary, Synoptics, are generally involved in projects whose funding is allocated on a long term basis, such as research or routine testing, and often through government agencies.  Atik, the camera company, has continued to grow its share of the astronomy market and any downturn in consumer spending has been masked by this success.

Currency exchange rates can have a significant impact on our performance due to the wide geographical distribution of our markets.  Prices to our distributors outside the US are generally denominated in Pounds Sterling, but local exchange rates can nevertheless affect the competitiveness of our products in those markets.

Following a period of maintained or increased government spending to support economies in an effort to mitigate recessionary pressures, it is possible that some reduction in grants and research budgets generally may have an adverse effect on the Group's customers.

The Board continues to look at possible acquisition targets whilst being cautiously optimistic that its markets will remain stable and that the Group's strategy will result in good medium-term growth.

H L Tee CBE

Chairman

Chief executive's operating report

Synoptics

Synoptics- a developer and manufacturer of innovative scientific instruments and systems that exploit digital imaging technology for a range of disciplines -accounted for 92% of the Group's revenues during the period.

Synoptics offers its products under three marketing brands, each targeting a different scientific discipline:

Synbiosis

Synbiosis provides instruments and systems for microbiologists.  In particular, it makes a range of instruments for counting and measuring the results of microbiological tests for the food, water and pharmaceutical markets.  These instruments bring benefits to the customer in the form of reduced labour costs, more repeatable interpretations of the results, and by facilitating the automatic recording of samples for audit purposes - the latter becoming increasingly important as microbiological testing become more regulated.

During the period, the new ProtoCOL 2 product was introduced fully to an expanded distribution network.  New applications for the product were developed to support particular market segments.  These applications are offered as optional software modules using the same basic instrument hardware and allow Synbiosis to target a broader range of markets.  In addition, we have continued to refine the operation of ProtoCOL 2 to make it easier and more efficient in use.

We have worked to strengthen the distribution channels for the Synbiosis range - the improved ease of use of ProtoCOL 2 over its predecessor has made this possible - and have been particularly successful in Asia, where there is strong interest in the vaccine testing market.  In the US, we have broadened the distribution network and added specific direct sales and support resource for this division. 

Syngene

Syngene provides instruments, software and systems for documenting and analysing 'gels' used by molecular biologists in genomic and proteomic studies and is the largest of the three Synoptics businesses. Almost all research in the biological sciences involves an understanding of the underlying molecular processes involving DNA, RNA and proteins, and gel electrophoresis is a fundamental process in many laboratories working in this area.

Syngene continued to grow well across the world through its established network of distributors and (in the United States) manufacturers' representatives.

During the year the division performed particularly well in the US, thanks to further growth and strengthening of its representative network and improved acceptance and reputation of the brand with respect to its local competitors; we believe we have reached a 'tipping point' in this regard and are now an established player in the US market.  Naturally, the increased value of the Dollar with respect to the Pound Sterling also had a beneficial effect on sales in the US over the period.

In the rest of the world, the picture was mixed with China and India showing good growth - particularly in high-end systems - but Europe and the UK flat.  We also saw some growth in the Middle East.

Sales of a low-cost, innovative gel imaging system to one of the world's leading suppliers to the pharmaceutical, healthcare and life sciences markets continued to increase.

Syncroscopy

Syncroscopy, provides digital imaging software to microscope users.  Its main product, a software package that allows customers to overcome the severely limited depth of field in an optical microscope, is principally sold via Leica Microsystems, a leading microscope manufacturer.  The software is offered as an option, as part of Leica's LAS software suite.  During the period sales of the product grew and development has continued.

Atik

Atik - formed in October 2008 by the acquisition and combination of Artemis and Perseu - designs and manufactures high-sensitivity cameras for deep-sky astronomical and life science imaging. It was acquired because of its strategic fit with the goals of SDI, the chance to achieve supply-chain integration of a key component of the Synoptics business, and because of its potential for growth in its astronomy market thanks to the quality of the principals. 

Initially the cameras were designed with the needs of the astronomer in mind: high sensitivity and low noise for imaging faint objects in the night sky.  However, these criteria also make the cameras suitable for low-light applications in other scientific applications and they were chosen by Synoptics in 2007 to provide cameras for the high-end Syngene systems.

The technological and market synergies identified at the time of the acquisitions have been achieved and Atik is performing well.

Development of a new software product for the post-processing of astronomical images has been accelerated through the use of a toolkit developed by Synoptics. 

During the year we decided to launch the Atik range in the US, and our initiative has demonstrated the potential for Atik in this territory.  Although the initial approach was to offer the cameras directly through a specific website and using the Synoptics office in Maryland to fulfil the orders, the increased profile of the brand has led to a number of good local companies wishing to distribute the cameras - and this may prove an attractive option.

Two important new camera ranges were launched during the year.  The first, the Titan, has the facility to provide a stream of images at high speed and is suitable for planetary imaging and imaging of faint objects such as nebulae; this makes it an ideal camera for the beginner astrophotographer.  Its fast readout rate also makes the platform suitable for a range of life science imaging applications.

 The second new camera is a high resolution (8 megapixel), low noise camera at a very keen price that has attracted a great deal of interest from the astronomical community.

The growth of Atik has resulted in a need to increase production capacity.

Phil Atkin

Chief Executive Officer

Financial Review

Investment in R&D

Expenditure on research and development in the current year was £628k, representing 8.7% of Group sales (2009: £626k representing 9.3% of Group sales). Under IFRS we are required to capitalise certain development expenditure and in the year ending 30 April 2010 £176k of cost was capitalised and added to the balance sheet. This expenditure represents the Group's investment in new product development. The amortisation charge for 2010 was £104k (2009: £40k). The carrying value of the capitalised development at 30 April 2010 was £406k (2009: £335k) to be amortised over three years.  

Earnings per Share

Basic earnings per share for the Group were 1.67p (2009: 0.05p), diluted earnings per share for the Group were 1.46p (2009: 0.04p).  Normalised earnings per share for the Group, excluding AIM admission costs and currency gains, were 1.81p (2009: 1.07p). 

Finance Costs and Income

Net financing income was £3k (2009: £5k). The reduction in financing income was a result of the fall in interest rates during the year.

Net financing expense was £65k (2009: £54k).  Loan stock interest charges for the year were £34k (2009: £25k).  Loan stock of £379k was issued in July 2008.

Taxation

The favourable tax balance of £18k is due to unrecognised tax losses in the Group and the additional deduction for R & D expenditure.

Cash Flow

At the year end the Group had a cash balance of £762k (2009: £757k).

Currency Translation

The results for the Group's overseas businesses are translated into Pounds Sterling at the average exchange rates for the relevant year. The balance sheets of overseas businesses are translated into Pounds Sterling at the relevant exchange rate. Any exchange gains or losses from translating these items from one year to the next are recorded in reserves.

As with a majority of international companies, the Group's UK and overseas businesses purchase goods and services, and sell some of their products, in non-functional currencies. Where possible, the Group nets such exposures or keeps this exposure to a minimum. The Group's principal exposure is to US Dollar and Euro currency fluctuations.

Funding and Deposits

The Group utilises short-term facilities to finance its operations. The Group has one principal banker with an invoice discounting facility of up to £500k. At the year end the Group had cash on the balance sheet. Surplus funds are placed on short-term deposit.

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 30 APRIL 2010

					2010		2009
					£		£
Revenue					7,186,072		6,753,869
Costs of sales					(2,894,171)		(2,946,222)
Gross Profit					4,291,901		3,807,647
- currency exchange gains/(losses)				(23,086)		183,077
- administrative expenses				(3,949,501)		(3,539,519)
- AIM listing expenses				-		(344,956)
Total administrative expenses					(3,972,587)		(3,701,398)
Operating profit					319,314		106,249
Finance income				3,369		4,677
Finance payable and similar charges				(64,953)		(54,137)
Net financing expenses					(61,584)		(49,460)
Profit before tax					257,730		56,789
Income tax					18,748		(49,077)
Profit for the year					276,478		7,712

Earnings per share
Basic earnings per share					1.67p		0.05p
Diluted earnings per share					1.46p		0.04p

All activities of the Group are classed as continuing.

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 APRIL 2010

					12 months to 30 April 2010	12 months to 30 April 2009
					£	£
Profit for the period					276,478	7,712
Other comprehensive income
Exchange differences on translating foreign operations					(11,987)	17,993
Total comprehensive income for the period					264,491	25,705

CONSOLIDATED BALANCE SHEET

FOR THE YEAR ENDED 30 APRIL 2010

				2010	2009
Assets				£	£
Intangible assets				741,825	702,058
Property, plant and equipment				325,175	334,379
Deferred tax asset				153,689	22,959
				1,220,689	1,059,396
Current assets
Inventories				680,345	508,710
Trade and other receivables				1,376,609	1,244,846
Cash and cash equivalents				761,933	756,686
				2,818,887	2,510,242
Total assets				4,039,576	3,569,638
Liabilities
Non-current liabilities
Borrowings				401,816	387,169
Deferred tax liability				121,830	111,101
				523,646	498,270
Current liabilities
Trade and other payables				1,305,887	1,171,110
Provisions for warranty				12,500	12,500
Borrowings				20,237	30,148
Current tax payable				39,278	11,188
				1,377,902	1,224,946
Total liabilities				1,901,548	1,723,216
Net assets				2,138,028	1,846,422
Equity
Share capital				180,158	166,638
Merger reserve				2,606,016	2,606,016
Share premium account				187,142	38,327
Own shares held by Employee Benefit Trust				(85,383)	(85,383)
Other reserves				263,904	399,124
Foreign exchange reserve				3,058	15,045
Retained earnings				(1,016,867)	(1,293,345)
Total Equity				2,138,028	1,846,422

Dr P Atkin                                                                                             M J Creedon
Chief Executive Officer                                                                         Chief Financial Officer

CONSOLIDATED STATEMENT OF CASHFLOW

FOR THE YEAR ENDED 30 APRIL 2010

		2010	2009
		£	£
Operating activities
Profit for the year		276,478	7,712
Depreciation and amortisation		294,680	195,522
Profit on sale of property, plant and equipment		(5,337)	(12,145)
Finance costs and income		61,584	49,460
Taxation (credit)/expense in the income statement		(18,748)	49,077
Decrease/ (increase) in inventories		(177,536)	5,137
Increase in provisions		-	2,500
Exchange difference		(5,450)	(4,918)
Employee share based payments		15,037	15,346
Operating cash flows before movement in working capital		440,708	307,691
Changes in trade and other receivables		(141,924)	(68,205)
Changes in trade and other payables		140,387	157,506
Cash generated from operations		439,171	396,992
Interest paid		(52,974)	(48,704)
Income taxes (paid) / received		(55,480)	(7,730)
Cash generated from operating activities		330,717	340,558
Investing activities
Capital expenditure		(168,214)	(237,915)
Acquisitions, net of cash acquired		-	(74,025)
Expenditure on development		(176,124)	(148,466)
Sale of property, plant and equipment		53,967	109,351
Interest received		3,481	4,600
Net cash used in investing activities		(286,890)	(346,455)
Financing activities
Capital element of finance leases		(40,955)	(30,785)
Issue of loan stock		-	379,000
Issues of shares and warrants		2,375	41,659
Net cash from financing		(38,580)	389,874
Net changes in cash and cash equivalents		5,247	383,977
Cash and cash equivalents, beginning of year		756,686	372,709
Cash and cash equivalents, end of year		761,933	756,686

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 APRIL 2010

	Share  Capital	Merger Reserve	Foreign exchange	Share  premium	Own shares held by EBT	Other  Reserves	Retained earnings	Total
	£	£	£	£	£	£	£	£
Balance at 30 April 2009	166,638	2,606,016	15,045	38,327	(85,383)	399,124	(1,293,345)	1,846,422
Shares issued as deferred payment	13,330	-	-	146,630	-	(159,960)	-	-
Deferred tax on options	-	-	-	-	-	9,703	-	9,703
Share based payments	-	-	-	-	-	15,037	-	15,037
Share options exercised	190	-	-	2,185	-	-	-	2,375
Transactions with owners	13,520	-	-	148,815	-	(135,220)	-	27,115
Profit for the year							276,478	276,478
Foreign exchange on consolidation of subsidiaries	-	-	(11,987)	-	-	-	-	(11,987)
Total comprehensive income for the period	-	-	(11,987)	-	-	-	276,478	264,491
Balance at 30 April 2010	180,158	2,606,016	3,058	187,142	(85,383)	263,904	(1,016,867)	2,138,028

	Share Capital	Merger Reserve	Foreign exchange	Share premium	Own shares held by EBT	Other  Reserves	Retained earnings	Total
	£	£	£	£	£	£	£	£
Balance at 30 April 2008	163,306	2,606,016	(2,948)	-	(250,147)	22,872	(1,136,293)	1,402,806
Deferred consideration on acquisitions	-	-	-	-	-	319,920	-	319,920
Deferred tax on options	-	-	-	-	-	(4,203)	-	(4,203)
Employee Benefit Trust adjustment	-	-	-	-	164,764	-	(164,764)	-
Share based payments	-	-	-	-	-	19,549	-	19,549
Equity element of loan stock	-	-	-	-	-	40,986	-	40,986
Share options exercised	3,332	-	-	38,327	-	-	-	41,659
Transactions with owners	3,332	-	-	38,327	164,764	376,252	(164,764)	417,911
Profit for the year	-	-	-	-	-	-	7,712	7,712
Foreign exchange on consolidation of subsidiaries	-	-	17,993	-	-	-	-	17,993
Total comprehensive income for the period	-	-	17,993	-	-	-	7,712	25,705
Balance at 30 April 2009	166,638	2,606,016	15,045	38,327	(85,383)	399,124	(1,293,345)	1,846,422

1        SEGMENT ANALYSIS

Management consider that there is a single business segment being the supply of digital imaging equipment therefore business segmental analysis is not relevant. 

The geographical analysis of revenue by destination and non-current assets (excluding deferred tax) by location is set out below:

Revenue by destination of external customer	2010	2009
	£	£
United Kingdom	678,235	984,644
Europe	2,336,144	2,136,301
America	2,349,047	2,017,099
Asia	1,545,555	1,431,901
Rest of World	277,091	183,924
	7,186,072	6,753,869

Non-current assets by location	2010	2009
	£	£
United Kingdom	892,498	829,806
Europe	114,912	59,981
America	59,590	146,650
	1,067,000	1,036,437

2          TaxATION

		2010	2009
		£	£
Current tax expense		84,482	6,660
Deferred tax (credit) / expenses		(103,230)	42,417
Income tax (credit) /charge		(18,748)	49,077

Reconciliation of effective tax rate

		2010	2009
		£	£
Profit on ordinary activities before tax		257,730	56,789
Profit on ordinary activities multiplied by standard rate of Corporation tax in the UK of 28% (2009: 25%)		72,164	14,197
Effects of:
Expenses not deductible for tax purposes		10,004	43,760
Additional deduction for R&D expenditure		(43,939)	(34,875)
Transferred (from) / to tax losses		(56,977)	25,995
		(18,748)	49,077

The corporation tax rate has increased from 25% to 28% following an increase in the size of the Group.

3          Deferred tax

		`			Deferred tax asset	Deferred tax liability
					£	£
At 1 May 2009					22,959	(111,101)
Tax losses recognised					100,560	-
Short term timing differences					10,166	(19,643)
Charge on intangibles recognised on acquisition					-	8,914
Share based payments					20,004	-
At 30 April 2010					153,689	(121,830)

			2010			2009
			Asset	Liability	Asset		Liability
			£	£	£		£
Deferred tax on capitalised R & D			-	(83,110)	-		(65,155)
Other temporary differences			23,988	(8,040)	13,822		(6,352)
Deferred tax on acquisition intangibles			-	(30,680)	-		(39,594)
Trading losses recognised			100,560	-	-		-
Share based payments			29,141	-	9,137		-
			153,689	(121,830)	22,959		(111,101)

4          Borrowings

Borrowings are repayable as follows:

		2010	2009
		£	£
Within one year
Finance leases		20,237	30,148
After one and within two years
Finance leases		15,805	8,641
After two and within five years
Loan stock		351,676	343,478
Finance leases		34,335	35,050
		386,011	378,528
Total borrowings		422,053	417,317

The proceeds of £379,000 from the issue of the loan stock are stated after adjustment in accordance with the accounting treatment required under IAS 32. Certain rights that are attached to the Company's loan stock result in it having characteristics of both equity and liabilities. Therefore the loan stock is considered to be a compound instrument.

The value of the liability component has been calculated based on the present value of the future cash flows in respect of payments the Company is obliged to make to holders of its loan stock. The value of £40,986 included within equity under the heading 'Other reserve' is the residual amount.

The loan stock is unsecured, bears interest at 9% per annum and can be converted at any time prior to 30 April 2013 at a rate of one ordinary share for every £0.70 nominal amount of loan stock. Any unconverted loan stock is due for repayment on 13 July 2013.

Subscribers to the loan stock also received warrants to subscribe for one ordinary share at a price of £0.70 for each £4.00 of loan stock subscribed for. The warrants are valid until 31 July 2013, except that this period may be extended by the Company at its sole option. The total number of warrants issued by the Company was 94,750.

5            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 earnings per share calculations relate to continuing operations of the Group.

			Profits attributable to shareholders £	Weighted average number of shares	Basic earnings per share amount in pence
Year ended 30 April 2010			276,478	16,523,554	1.67
Year ended 30 April 2009			7,712	15,841,221	0.05

The calculation of the 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. 

					Diluted earnings per share amount in pence
Year ended 30 April 2010					1.46
Year ended 30 April 2009					0.04

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

	2010	2009
Weighted average number of Ordinary shares used for basic earnings per share	16,523,554	15,841,221
Weighted average number of shares held by Synoptics Employee Benefit Trust	711,528	711,528
Weighted average number of Ordinary shares used as deferred consideration	1,333,000	1,333,333
Weighted average number of Ordinary shares under option	374,365	625,593
Weighted average number of Ordinary shares used for diluted earnings per share	18,942,447	18,511,675

6        FINANCIAL INFORMATION

The financial information set out above, which has been extracted from the annual report and accounts for the year ended 30 April 2010 does not constitute statutory accounts within the meaning of section 435 of the Companies Act 2006.

The annual report and accounts will shortly be sent to shareholders and will be available on the Company's website, www.scientificdigitalimaging.com

The Company's Annual General Meeting is due to take place at Francis House, 112 Hills Road, Cambridge CB2 1PH on 23 September 2010 at 11:00 am.

 

END

 

 

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