Translation and content management specialist SDL made an emphatic return to underlying growth in the first half, sparking a flurry of analyst earnings upgrades. The Maidenhead-based software firm registered a 11 per cent rise in underlying revenues - adjusting for adverse currency movements and the contribution from acquisitions - and increased both adjusted pre-tax profit and EPS by 12 per cent to £16.3m and 15.7p, respectively.
The clearest evidence of improvements to trading came from the 12 per cent underlying increase in Language Services revenues, while Content Management Technologies (CMT) grew organic revenues by an impressive 19 per cent, driven by structured content management demand, such as online manuals. The headline 43 per cent hike in CMT revenues was helped by a first contribution from XyEnterprise. Acquisitions remain key, with Xopus bought in June for £1.2m, adding XML editing on the structured content side, while last month's purchase of Language Weaver for £26.9m adds next-generation automated translation technology to SDL's offering.
SDL's wide geographic reach means the business is far less exposed to UK public spending cuts with less than 10 per cent of revenues coming from the UK and much of the growth in the first half originating from Asia and US.
Investec Securities upgraded full-year pre-tax profit estimates from £32.7m to £33.5m, giving EPS of 30.2p (£29.8m and 28.1p in 2009).
SDL (SDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 525p | MARKET VALUE: | £408m | |
| TOUCH: | 524-525p | 12-MONTH HIGH: | 556p | 314p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 21 | |
| NET ASSET VALUE: | 231p* | NET CASH: | £55.5m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 83.3 | 11.8 | 11.4 | nil |
| 2010 | 94.5 | 12.9 | 12.4 | nil |
| % change | +13 | +9 | +9 | - |
*Includes intangible assets of £133m, or 171p per share | ||||
