"The currency depreciation makes sense, and sales aren't too far...

"The currency depreciation makes sense, and sales aren't too far off. But where are the extra expenses coming from?"

At first glance, it's a clanger.

And you are right: the Revenue line is doing what it has always done, that is, it got bigger, so the problem is a cost issue.

And it is quite easy to tell almost exactly where the cost issue is, because SDI reports a very simple P&L: 95% of Operating Costs are comprised of just two line items, namely Cost of Goods (40%) and Selling and Marketing Expenses (55%) [*].

And given the changing sales mix away towards higher GP Margin non-amalgam products, the problem can't possibly lie in the Cost of Goods line.

So, it must be an increase in expenditure on "Sales and Marketing" (of the order of at least $1.0 to $1.2m) that has caused the damage to NPAT in the half.

Presumably that sort of investment has been undertaken on the basis that it will generate a return in additional sales in coming periods.


[*] Selling and Marketing is a bit of a "catch-all" category, as it includes management and head office overheads