SDL
17/12/2015 09:42
GENERAL
PRICE SENSITIVE
REL: 0942 HRS Solution Dynamics Limited
GENERAL: SDL: SDL Trading Update
Solution Dynamics Limited (SDL or the Company) advises that
stronger-than-expected trading results have been achieved during the
seasonally important October/November period. In addition to higher base
profitability, a number of other items are contributing to an improved
outlook for the first half and full year:
? further print cost efficiencies have been realised;
? confirmation of several new business wins and an increasing degree of
certainty around when revenue from these clients is likely to commence;
? additional costs in the UK and New Zealand to support higher levels of
business activity;
? SDL has received approval, subject to final contract, from NZ Trade &
Enterprise for growth funding support to assist in establishing in-market
presence in the UK and Europe. This is to help ensure SDL successfully
delivers against the D?jarMail UK health sector contract, as well as
contributing towards efforts to secure new D?jarMail customers in the UK and
Europe. The growth development funding runs until mid-2018 and will
contribute approximately 40% of SDL's qualifying market development expenses
to a maximum reimbursement of $428,000 over that period; and
? some previously expensed software development costs (both internal and
external) relating to a print procurement solution will now be capitalised as
SDL has reached agreement with the external developer to acquire the software
IP. SDL will now obtain full revenue resulting from the software deployment,
which is expected to be installed for the customer during the third quarter
of FY2016.
A condition of the UK growth funding from NZ Trade & Enterprise was that SDL
commit to ensuring it would have sufficient internal funding available to
support ongoing investment in UK market development. Consequently, NZ Trade
& Enterprise required that the Company's dividend payout ratio be capped at
75%. Accordingly, the directors have agreed to amend the dividend policy
from a payout ratio of at least 75% to a maximum payout ratio of 70-75%.
The combination of stronger trading and the above items means SDL's first
half net profit after tax for FY2016 is likely to be around $600,000. This
is approximately 7% ahead of the prior year reported profit (the prior year
had no tax liability; this expected result is after providing for tax at a
rate of 25-26%). At a net profit before tax level, the expected FY2016
interim result is expected to be approximately 49% ahead of the prior
financial year.
SDL previously provided a full year expected profit outlook of net profit
after tax in excess of $700,000. The company is now upgrading this outlook
to a net profit after tax in excess of $850,000. This outlook is partly
contingent on software renewals and upgrades scheduled for the last quarter
of the year and there is the usual risk of slippage in the timing of these.
For further information please contact:
John McMahon
Chairman
+61-(0)410-411 806
Nelson Siva
Managing Director
+64-(0)21-415 027
End CA:00275266 For:SDL Type:GENERAL Time:2015-12-17 09:42:41
