Merchandising and tailored customer service aren't just the domain of bricks-and-mortar retailers. More and more companies are using SDL's (SDL) software to engage with online customers and translate and personalise their websites. That helped the 'customer-experience management' specialist swing from a hefty operating loss to a £9.7m profit.
As part of a far-reaching restructuring, SDL has shifted its focus towards integrated, cloud-based platforms that offer web, social, big data analysis, e-commerce and language tools. It has also invested an extra £15m-£20m in developing products and strengthening its sales teams in the past two years. It looks as though this may finally be paying off. Constant-currency sales rose in both its technology and language services divisions, and the former's adjusted pre-tax loss narrowed by 36 per cent to £9.8m. Together with much-improved cash generation, that gave management the confidence to reinstate the dividend.
SDL's technology bookings rose 14 per cent to over £99m, and the division's annual recurring revenue - which stems from software services and ongoing support and maintenance - climbed 14 per cent to £71m. Meanwhile, its language services segment widened its gross operating margin by 3.1 percentage points to 45.5 per cent as it automated more translation services, improved workflow efficiency and used lower-cost production centres.
Broker N+1 Singer expects pre-tax profit of £22m, giving EPS of 19.4p (from £16.5m and 15.1p in 2014).
| SDL (SDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 433p | MARKET VALUE: | £351m | |
| TOUCH: | 433-436p | 12-MONTH HIGH: | 459p | LOW: 288p |
| DIVIDEND YIELD: | 0.6% | PE RATIO: | 54 | |
| NET ASSET VALUE: | 249p* | NET CASH: | £13.1m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 204 | 28.8 | 28.4 | 5.5 |
| 2011 | 229 | 33.8 | 32.7 | 5.8 |
| 2012 | 269 | 27.4 | 26.1 | 6.1 |
| 2013 | 266 | -24.4 | -34.8 | nil |
| 2014 | 260 | 9.4 | 8.0 | 2.5 |
| % change | -2 | - | - | - |
Ex-div: 30 Apr Payment: 5 Jun *Includes intangible assets of £203m, or 250p a share | ||||
