Investors sent shares in language translation and content management specialist SDL (SDL) down 4 per cent after management revealed it would focus on helping brands to manage, translate and deliver localised content rather than improve their customers' experiences. The group - which counts Nike, Dell and Tesla among its clients - posted significant statutory losses in 2015. But exclude £46m in impairment, restructuring and other one-off costs and operating profits leapt 23 per cent to £20.7m.
Interim boss David Clayton plans to sell three peripheral businesses that account for about a tenth of total turnover. He also intends to funnel cost savings into retaining major customers and capitalising on the group's technology, in-house translators and strong brands such as Trados.
Solid demand drove sales up 4 per cent in the key language services division. Moreover, automation and outsourcing helped to widen its pre-tax profit margin by 3.5 percentage points to nearly 20 per cent. But regional tensions weighed on sales in the language technology division, which provides machine translation and related consulting, and new licence bookings nearly halved in the global content technologies business, contributing to a pre-tax loss of £1.5m there.
Broker Numis expects pre-tax profits of £24.7m, giving EPS of 20p (from £20.6m and 16.1p in 2015).
| SDL (SDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 417p | MARKET VALUE: | £339m | |
| TOUCH: | 417-419p | 12-MONTH HIGH: | 472p | LOW: 317p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | NA | |
| NET ASSET VALUE: | 205p* | NET CASH: | £12.4m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2015 | 267 | -25.2 | -37.9 | 3.1 |
| % change | +2 | - | - | +24 |
Ex-div: 5 May Payment: 3 Jun *Includes intangible assets of £163m, or 201p a share | ||||
