Sdi Share Discussion Threads

[nick2008] 18/9/2013 11:50

SDI continues Asia Pacific partner recruitment



"In just six months, Synoptics Health has appointed six new distributors including Ruhof China, covering China and Taiwan, GSI Creos Corporation in Japan, In Vitro Technologies in Australia, PharmaTech Inc in South Korea, V-Bio Science in Malaysia and Lab Focus in Thailand. They will market and support Synoptics Health's ProReveal portfolio of products, which includes the ProReveal viewer and fluorescence testing kits in their assigned regions."

"Synoptics Health distributors are organising ProReveal seminars for SSD personnel in over 50 hospitals across the Asia-Pacific region during 2013. During these seminars, Synoptics Health experts will introduce the ProReveal technology and present trial data, to show that ProReveal's protein detection is around 100 times more sensitive than tests currently being used in SSDs."

"The ProReveal technology launched in 2012 is the only commercial test that will meet new upcoming Department of Health guidelines on minimum safe protein contamination levels and using this test in hospitals in the Asia-Pacific region will ensure that surgical instruments are being properly checked for contamination from proteins such as prions that cause vCJD."

"SDI's current sales pipeline continued to grow. The board has been encouraged by the response to its newly launched ProReveal system"

"In the last 12 months the company says it has seen revenue growth globally in the major application areas with improved gross margins. Over the period SDI has restructured its manufacturing to reduce the cost base. New systems have been implemented, resulting in greater efficiencies and cost savings throughout the company"

[nick2008] 17/9/2013 10:03

MP finds out about life-saving work as city firm cleans up - 10/09/2013http://www.cambridge-news.co.uk/Business/Business-News/MP-finds-out-about-life-saving-work-as-city-firm-cleans-up-20130910092053.htmJulian Huppert, MP, left, with SDI chief executive Paul EllwoodDirt was under the microscope when City MP Julian Huppert visited Scientific Digital Imaging in Nuffield Road to see the company's ProReveal Sensitive Protein Detection Test.This rather long name is actually about life and death in our hospitals, as it relates to a technique developed by SDI's Synoptics Health division to spot any remaining traces of protein on surgical instruments.The method involves flourescence, which shows up protein on instruments which have been sterilized and are considered ready for re-use.Tiny residues of protein on surgical instruments are among the causes of hospital acquired infections which can keep patients in hospital much longer than expected, and even kill them.Paul Ellwood, SDI Synoptics Health chief executive, said: "Dr Huppert is well known for being a champion of good science. We are pleased that he is concerned to find out why current testing being used in hospitals worldwide is failing patients. With his support, he hope the UK will lead the world in adopting new quality standards and set a minimum safe residual protein level, as well as adopt new tests."Dr Huppert said: "This is another example of Cambridge expertise solving global problems."

[gnnmartin] 16/9/2013 23:48

cfro: I think you have misunderstood what the ProReveal does. It is not used to inspect every item: it is used to inspect a sample. The items that are tested must then be cleaned again. So it is not four minutes per item cleaned, but four minutes per sample. The appropriate sampling rate is still not decided.

Paradoxically, the technical strength of the ProReveal might prove to be its commercial weakness. The problem is that it tells you when you are not cleaning your equipment properly, but it does not tell you what to do about it. Of course, it should be better to know that you have a problem than to remain in ignorance, but politically speaking you don't have a problem until you know or until you ought to know.

The current test for cleanliness does not work, but a hospital can argue it has taken all reasonable precautions if it has used the current method. What happens if ProReveal is introduced? The current test gives a yes/no answer to "Is this clean". The new test is much more sensitive than the current, even where the current test works, so how clean is 'clean'. Set the bar too high and hospitals have a problem if their surgical tools are found to be unclean. Either the hospitals stop operating, which is a potential disaster, or they continue operating while they work out how the cleaning process can be brought up to scratch, and that is also a potential political disaster. ("Shock: hospital deliberately ignored warnings!").

Of course, this ought not to stop ProReveal being adopted. It seems everyone is very enthusiastic, except the people who are going to take the flack when hospitals face problems. They are stalling: nobody wants to be the person who levers the top off this can of worms.
Nigel Martin

[woodcutter] 13/9/2013 15:52

what isn't recognised in this business is the impact of operational gearing, a small increase in revenue relative to the potential operating profit based on the gross margin which is over 50%.

Based on previous years figures a relatively achievable increase in sales of historic 7% last year only resulted in a 3.5% increase in overheads thats a 2/1 ratio. So on this basis forward looking to this year and assuming a 10% increase in sales, in £000:

Revenue £8432 ..................10% improvement
COS £3625
Gross profit @ 57% £4807
O/H £4264 ..............5% increase based on ratio 2/1
OP pft £543K
tax @ 10% assuming r&d etc £54K (assumed same as last year)
pat £489K
share in issue 25m
eps 2p

So a 10% increase in sales should result in a 100% increase in eps. Indeed last year a 7% increase in sales resulted in a 3+ fold increase in op profit and a 10 fold increase in eps. This suggest that the current administration overheads are sufficient to meet significant upturn in revenue.

The broker forecast on digital look is for 400K pbt and 3.8p eps can't figure how that was analysed, perhaps they're expecting no increase in O/Hds. Nevertheless the important point is the operational gearing results in significant eps improvement for a small increase in sales.

Woody

[nick2008] 12/9/2013 16:56

Exactly my thinking as well - no need for placing. Growth in both revenue and profits is very much expected here. With just £500k profits, on a average PE of say 15-25, the share price should be 31-51p. The current market cap of £5m is too low, IMHO

[woodcutter] 12/9/2013 07:04

Why the need for a placing? Why at a deep discount?

They raised cash since the last results, the balance sheet is decent and they generate cash. The only reason i can see to raise funds is if ProReveal takes off and they need to generate more working capital for expansion of product volume, and i see that as positive.

I'd consider it a negative if they weren't profitable with no signs of growth, significant cash burn and a weak balance sheet with no cash generation. I don't see any of this at present. It might look tight but it's a question of how well they can manage their cash flow imv.

Changing processes like this takes time for major institutions and it seems some countries/businesses have already recognised the benefits. The benefits are not small, ProReveal is a ten fold step change in measuring cleanlines. SDI have first mover advantage.

Granted it's not without risk and the liquidity is clearly an issue but it will only take a small number of influential businesses/health care institutions to adopt and accepted it then it will just be a matter of time before it become de-facto standard aimho.

Woody

[interceptor2] 11/9/2013 20:01

Just read a good post on THF, with some more background information about ProReveal.



ic2...

[interceptor2] 11/9/2013 18:52

Some excellent posts today with both the pros and cons discussed, just how a thread should operate.

I do agree that the shares are rather illiquid, which needs to be remembered when buying and working out an exit plan. They can be brought inside the spread on certain days, which I managed a few days ago, but like another poster here, I had to use a fill/kill to get the price I wanted. Only a modest buy for me, but I have price targets in mind to add again, as it might prove difficult to buy on any significant news.

The net margins reported in July's full year results were 2.78%, this may sound rather low, but worth bearing in mind that nearly all the profits were achieved in H2. So a fair reflection could be net margins just over 5%, and that is historic, so it will be interesting to read the AGM statement on Monday.

In the statement released with the full year results, SDI said that "Demand for automated systems was exceeding supply" which would imply that margin's should improve in this financial year. Revenue and margin inprovement is a very powerful combination.

It is also worth mentioning the worldwide nature of SDI sales, as can be seen below. So they aren't just dependent on the UK NHS, orders could come at any time from any worldwide region imo.

Revenue by destination of external customer 2013 2012
GBP000 GBP000
United Kingdom (country of domicile) 747 802
Germany 774 505
Rest of Europe 1,443 1,376
America 2,354 2,248
Hong Kong 743 500
India 482 665
Rest of Asia 809 734
Rest of World 313 340
------ ------

7,665 7,170

Regards ic2...
====== ======

[cfro] 11/9/2013 15:52

Smithie6 - my thoughts exactly, and for those reasons im sorry to say that i just cant see this product really taking off. Not only that but the shares are horrendously illiquid to the point that they are near on impossible to deal in. A further negative is the fact that they will need another placing and that is most likely going to be at a big discount.

Not for me im afraid.

[nick2008] 11/9/2013 15:12

Indeed some very good points, few from my side as well -

Barrier to Entry
The ProReveal test has been developed over four years in partnership with scientists at Queen Mary University of London, and is patented. It is not easy for a competitor to replicate this sort of equipment for commercial purposes giving them a lead over competitors. Others who developed similar technology and were considered within the NHS framework policy are from University of Edinburgh/Royal Infirmary of Edinburgh and University of Southampton, University Hospital Southampton and Southampton General Hospital.

Edinburgh is still within the development stage. Southampton is commercially available but the downside to their technology is that the solution requires microscopy which requires (a) an expensive microscope (£40k) (b) skilled labour and (c) tested outside the surgical services department




SDI patent link show the inventors including Dr.N.K.Nayuni.


Inventor(s) list and link


PERRETT, David
NAYUNI, Nanda Kishore;
ELLWOOD, Paul;
MASKELL, Richard;
WRIGHT, Alastair Hayden;
THOMPSON, Sarah;
SULLIVAN, Laura;

Note that one of inventor is Paul Ellwood, the CEO of Synoptics - One of subsidiary of SDI.




Shared Services / central service for checking
Actually, some of the hospitals already use a central service. A company called Synergy provides these services. However, some of these hospitals would still buy ProReveal to keep it in-house so that they can check the condition of returned instruments after washing.

There are others who will require this system :

1. instrument manufacturers to aid in instrument design. (their requirement is that a good instrument is one that works AND can be cleaned easily. If there are any potential areas where proteins can get 'stuck' and dont get removed easily during a washing process, then they have failed the design itself. Only way is to check their instruments)

2. One time use instrument guys who want to check the quality of the instruments they import from overseas specially from Asian countries

each of these have different requirement for buying SDI ProReveal – the potential is really huge!



One Off or repeat business
There is a one off revenue for selling the SDI ProRveal machine AND repeat of consumables in terms of spray and paper.



Margins
This company grew both organically and through acquisitions. Last year, they appointed a new CEO, (who was with the company for couple of years prior to being appointed). This new CEO is from a financial background, who undertook an operational review last year – this has already yielded results. Their administrative costs went up slightly, but that was mainly due to increased sales/marketing effort and extra staff recruited for the launch of ProReveal.

Going forward, the one off cost and repeat business - both have significant margins and I expect to see increased profits with increased sales here.

DYOR
Nick

[woodcutter] 11/9/2013 14:49

many good points today but in the end it's about risk reward and it's fair to acknowledge at this stage in the business cycle that it's a bit of a punt. I was fortunate to accrue a reasonable size holding at 18.5p an topped up with a similar size yesterday at 19.5p, but it is tightly held.

It's a bet on the equipment becoming a nhs/global standard and it that happens whoosh! Those odds i can handle:-)

Smithie you make some reasonable points but i would be amazed if it's not patent applied and as i said before the ongoing consumables and upgrades would add recurring revenue base. And yes maybe there's some uncertainty that last years orders can be repeated i suppose. Nevertheless if forecasts are realistic it's way undervalued for it's potential, aimho.

woody

[xlairways] 11/9/2013 13:47

Staring to rise nicely today!

[the oak tree] 11/9/2013 13:46

whoops, pushed the price up 12% today. But the on screen price has been out of touch for a while when asking for volume.

Shanklin - well done getting them at that. Am afraid I don't know too much either on this one.

[shanklin] 11/9/2013 13:29

Interesting comments re the lack of liquidity. When I bought 25k on 07-Aug-13, I was able to get them at the mid-price which was 18.5p. I haven't considered buying more because of the lack of liquidity and my lack of in-depth knowledge here.

[the oak tree] 11/9/2013 13:24

Would just like to emphasis I hate their small profit margin. And to be honest I don't know why its so low? For this kind of kit and selling to this kind of industry it should be way more than it is.
Time will tell though if that changes.

[the oak tree] 11/9/2013 13:18

Decided to have a small flutter on this, so just bought a few today. Having said that I had a real hard time of it getting any stock! Market size is a tiny 3k shares , I bought just under 28k shares and had to pay 22p. Thats 2p over the market offer of 20p which is already a wide spread of 17.5 - 20.

On the one hand a bit peeve at all this and a little worried if I have to sell in such a baren market. On the other hand I reckon it won't take that much more buying to push the price up.

Why buy?
1. Well I like the turnaround situation. Have often seen a share ramp up in eps but the price lags behind events which can result in a good buying price - this could be one of them. Especially when like this one the comany is off people's radar. Example, share volume is very low. 2014E eps is 3.8p giving a PE of 5. 2015E of eps of 4p is way too low IMO given the huge movement between 2013 and 2014 (assuming 2014 forecast is made!)
2. Like the video, seams a good product and can imagine it being rolled out. I think some will like how it can keep a history log of what was tested and when. Could well take a while to roll out though as I've experienced the NHS being very slow to adopt new products in another share I had.
3. Like how the main person is now from a finance background. Sales are important, but on such low margin, someone needs to look at this to increase it. Perhaps that will happen now?
4. Looking back since 2008 its always made a profit apart from one of the years in 2011 (2009 was basically breakeven ish). So its got a reasonable , if somewhat dull trading history. The important part is its in the black and normally trades that way.
5. Not long to wait for trading information news. AGM is on 16th Sept. Interim earning release is due about 9th Dec. So it would only take a postive trading RNS to make a big difference here.
6. Balance sheet seams OK. Jury is out on the assortment of trading compaines / divisions but I'll just see how it pans out.

[smithie6] 11/9/2013 10:11

Are the chemical cleaners not so wonderful....if we believe their claims... that this scanning test is or will become a waste of time ?

is it largely a fluorescent bulb and a camera ?
is it that clever ? (the spray ??)
are there barriers to entry ....are any parts of it patented ?

(if no barriers to entry....then surely there will in the future be 10 companies making competing units......at lower price...)
----

are the health sector results a one off...due to selling 25 units to China ?

with no repeat sale of 25 units to China this year....is there any risk that results will drop ?

once sales are achieved....if the units last for 10 years before replavement....does that mean no on-going business for SDI ?

astronomy sector CCD device sales....looks like 0 pts from an investing viewpoint imo. correct or ?

if hospitals in 1 area decide to use 1 shared sterlisation centre for 10 hospitals surgical instruments.....for cost efficiency.....would that divide by 10 the number of possible sales....rather than each hospital having its own set of expensive equipment, m2 of space and heating and staff perhaps with low utilisation ?

------

summer news

*The Directors believe that should the Equity Fundraising not proceed for any reason, the Company will not have adequate funds to repay the convertible loan stock and thus would need to find alternative funding. *

medical sector.....issuing new shares for funding....every day news...

[cfro] 10/9/2013 18:02

Thanks for the replies chaps.

No disputing the fact that Proreveal is as i said a nice bit of kit and clearly the best of its kind on the market.

I see the product is only currently in a NHS teaching hospital and i think, one other hospital. So, although a great start, still very long way off national roll-out. All new products have to cross a 'chasm' which is very hard to do and many fail. Proreveal still has this 'chasm' to cross. If it can then the shares could multi-bag as more hospitals acquire the machines.

Sorry to sound disbelieving here but im not being deliberately negative, just trying to understand the product and whether the company stands a chance of success or not.

Still seems to me to be a very time-consuming way of finding out if surgical instruments are clean for surgery or not.

[nick2008] 10/9/2013 17:49

interceptor2I said 5 min by rounding it off. Yes! Exact time as given is 3min and 30 seconds. The swab test from 3M product is given as 10min, but again rounding it off to say 12-15 min.

[interceptor2] 10/9/2013 17:19

I was interested to hear the reply to CFROs question, because I did buy an initial position yesterday. I thought the video presentation of ProReveal was very impressive, and it is clearly a much more effective test than the presents ones. I think the time given for each test was 3 minutes 30 seconds, so very interested in the reples to the question.

I was impressed at the full year results, that EPS was 1.05p vs only 0.06p at the interims. Which means that they made EPS of 0.99p in H2, with net margins of 2.78%. Interims due in December could be very interesting.

ic2...

[nick2008] 10/9/2013 16:47

Thanks Woody,

I was going to reply in the same way.

Adding on to your reply, SDI ProReveal checks takes only about 5 min whilst others take anywhere from 15-30 mins to allow it to change colour. One instrument is taken from the tray of washed instruments, and its usually one instrument per wash cycle. The washing machines in the hospital facility have about 5-6 cycles per day.

So, SDI ProReveal
- Checks Faster (only about 5min)
- Checks whole of the instrument
- Displays the position of all proteins
- Gives the measurement for the total amount of protein
- Can measure in nanograms
- Stores the image and results

Whilst other tests

- Test takes between 15-30minutes
- Can only check a very small part of any instrument
- Cannot show position of all proteins on the instruments
- Not very sensitive
- Subjective test – relies on operator
- Cannot check all the proteins and remove them, hence they can be missed

DYOR
Nick

[woodcutter] 10/9/2013 12:21

i guess you have to compare the process with the ninhydin method and despite searching the web i'm not having much success in finding info on that method. However it appears the instruments are individually swabbed and then the swab is placed in some kind of solution to determine if it changes colour or not. (a bit like a litmus test i guess)

Not sure how long it takes but from this research article below not all instruments seem to be affected it seems to depend on what type of instrument and the contact zone on the patient.

hxxp://jcm.asm.org/content/44/10/3728.full

apologies if this has been posted before.

My guess would be similar time frame but that's only a guess.

fwiw i've added again today as i believe the product is up and running and bringing in revenue and the last set of results were very optimistic, coupled with that the director buying added some weight to my decision. That's my second purchase now so hopefully it'll turn out okay.

Downside is the liquidity as it's very tightly held, had to use fill or kill orders to buy but can sell way above the bid so there seems to be a shortage of stock. Any good postive news and it could fly.

The other upside is if you can get the machines accepted on a grand scale you've got the consumables business plus any upgrades. Could be very interesting.............aimho

Woody

[cfro] 09/9/2013 10:46

Nick2008 -

I dont have a position here but just taking a look. Just looked at the Proreveal video and clearly a nice bit of kit but it does look very time-consuming to me and i wonder just how cost effective this really is.

Seems to me that this is a permanent job for someone. With one instrument at a time being placed in the machine and then taking a minute or so to work, would take forever to prepare for surgery.

[nick2008] 09/9/2013 09:56

In my earlier posts here I said this

"The initial target market is 250 hospitals in the UK where currently each of them have at least one protein detection device in their surgical department with one test being conducted every day at a cost of about £6 per test based on using the current market leader Ninhydrian protein detection kit, or the Bieurt test. The new NHS recommendation within the CFPP 01-01 recommends fluorescence technology to be used for protein detection as well as the current tests. The NHS has recommended that these tests are carried out on a more frequent basis but the industry awaits their recommendations. "



And see this article which actually rubbishes the current market leader Ninhydrian protein detection kit for detecting the proteins.

SDI ProReveal is the future!!





"Conclusions
Ninhydrin kits, currently used in SSDs, are ineffective at detecting residual proteins due not only to the insensitivity of ninhydrin towards proteins but also to the poor desorption of adhered proteins by swabbing. Overall ninhydrin, either as a laboratory reagent or as supplied in protein detection kits, does not provide sensitive detection of proteins and generates high numbers of false negatives when used in decontamination practices

[nick2008] 08/9/2013 12:01

SDI ProReveal on youtube - have a look, it explains "ProReveal Fluorescence Protein Detection Test"





Published on 28 Aug 2013

The ProReveal Fluorescence Protein Detection Test has been developed in response to the need to find a more sensitive and accurate method of checking for residual proteins that can sometimes remain on surgical instruments after the washer disinfection process. The ProReveal Fluorescence Protein Detection Test is a highly sensitive fluorescence-based patented protein detection test for checking the presence of residual protein on surgical instruments after going through any washer disinfector process. The test is cost-effective and delivers objective, visual and measurable results and removes any doubt as to whether the washing decontaminator process has left instruments clean enough to meet residual protein level standards.