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SDL 's growth slowed in the second half after a strong first half that benefited from the introduction of Microsoft's Vista. Even so, the results were at the top of the range of upgraded expectations, reflecting strong demand for the company's translation services and the benefit of acquisitions. The latter included internet content management group Tridion, which helped fuel a big increase in US turnover.
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Tridion also helped the company add a number of blue-chip names to its client list, including TomTom, Gulf Bank and Disneyland Paris. SDL bought Idiom for just over £11m earlier this month, too, to further strengthen its position in translation management systems. Still, strip out acquisitions, and organic revenue growth was a healthy 8 per cent last year.
The company is taking a cautious line on prospects, but it should continue to benefit from the increasing trend towards outsourcing, while localisation services, which account for 70 per cent of turnover, have proved a defensive area to be in during an economic downturn. Meanwhile, demand remains robust in Asia.
Investec Securities has raised its forecast and now expects normalised pre-tax profits of £20.1m, giving EPS of 19p (17.2p in 2007).
SDL (SDL) |
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|---|---|---|---|---|
| ORD PRICE: | 272p | MARKET VALUE: | £204m | |
| TOUCH: | 271-272p | 12-MONTH HIGH: | 429p | LOW: 219p |
| DIVIDEND YIELD: | nil | PE RATIO: | 21 | |
| NET ASSET VALUE: | 151p* | NET CASH: | £15.5m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2003 | 64 | -0.8 | -3.3 | nil |
| 2004 | 62 | 4.4 | 5.4 | nil |
| 2005 | 79 | 5.2 | 4.9 | nil |
| 2006 | 95 | 9.4 | 9.9 | nil |
| 2007 | 117 | 12.7 | 13.1 | nil |
| % change | +24 | +36 | +32 | - |
*Includes intangible assets of £102m, or 136p a share. |
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Technology is not a popular sector at the moment, but SDL is not heavily exposed to the financial services market and a forward PE ratio of 14 is good value.
Last IC View: Fairly priced, 399p, 3 Sep 2007
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-IC-1.5.4a-prod - 31/10/2008 13:11:34 - carlos.princz
