Tech group SDL (SDL) endured a tough time between 2013 and 2015 after poor management sent the numbers crashing into the red. But the group's leadership has had an overhaul. Surely there can be no one better qualified to get a language translation tech company back in shape than a German-born, French, Spanish and English bred, multi-lingual tech specialist. Adolfo Hernandez, who was appointed as chief executive this time last year, has implemented a new strategy that is already delivering results.
Key to the turnaround has been the disposal of non-core businesses. Although these contributed £25m to the top line in the reported period, they are heavily lossmaking and were the sole cause of another year of pre-tax losses. Continuing operations delivered a pre-tax profit of £11m in the period, swinging from a pre-tax loss of £3m in 2015. Free cash flow generation is also back on track, which helped send year-end net cash up to £21.3m, nearly £9m ahead of last year.
With regard to the strategic reshuffle, Mr Hernandez said "the heavy lifting is behind us" and 2017 would be "a year of execution". The outlook is good, with 60 new customers secured in the period. Broker N+1 Singer therefore expects adjusted pre-tax profit and EPS for the year to December 2017 of £30.3m and 27.2p (from £27m and 26.4p in FY2016).
SDL (SDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 501p | MARKET VALUE: | £409m | |
| TOUCH: | 500-501p | 12-MONTH HIGH: | 504p | LOW: 377p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | na | |
| NET ASSET VALUE: | 207p* | NET CASH: | £21.3m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2016 | 290 | -15.8 | -22.3 | 6.2 |
| % change | +9 | - | - | +100 |
Ex-div: 11 May Payment: 9 Jun *Includes intangible assets of £152m, or 186p a share | ||||
