An improving global economy and the ever increasing globalisation of business has benefited SDL, whose translation products and services enjoyed growing demand through 2011. SDL has expanded into emerging markets such as China, Korea, Japan, Turkey and Chile which helped revenues from this segment grow by 50 per cent in 2010, but they still only account for 12 per cent of SDL's total business.
As well as in-house development of new products, SDL completed two acquisitions during the year to add to its product set. Time Weaver improved its capability in statistical machine translation or translation by computer and Xopus brought in a product which allows non-technical authors to create content, broadening the appeal of its products. Such acquisitions have helped the business to increase cross-selling opportunities and SDL has a healthy cash pile for further acquisitions to bolster its product offering.
The steady improvement in demand, which saw underlying revenues accelerate across all three divisions during the second half, has continued into 2011 and broker Panmure Gordon expects another year of growth, forecasting 2011 adjusted EPS of 36p (2010 34.7p).
|ORD PRICE:||658p||MARKET VALUE:||£511m|
|TOUCH:||656-659p||12-MONTH HIGH:||681p||LOW: 416p|
|DIVIDEND YIELD:||0.8%||PE RATIO:||23|
|NET ASSET VALUE:||250p*||NET CASH:||£46.6m|
|Year to 31 Dec||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 4 May
Payment: 3 Jun
*Includes intangible assets of £159m, or 204p a share
Information management on a global scale is increasingly important for business customers and, barring any major economic reversal, SDL appears well placed for another solid performance in 2011. But, trading at 18 times EPS estimates, its shares are fairly priced.
Last IC view: Fairly priced, 525p, 3 August 2010