SDL’s (SDL) shares spiked by almost a fifth after the group's first-half numbers revealed that it managed to eschew any major disruption to its productivity, unveiling a 3 per cent bump in operating profit.
Investors were encouraged by the language translation group's stable top line, with sales in sectors such as corporate communications and life sciences offsetting a decline in more vulnerable industries.
Language services revenues nudged down 2 per cent, held back by weaker trading in marketing solutions. But the gross margin grew to 43.5 per cent, thanks to improvements in delivery models. Language technologies revenues were flat on last year and machine translation logged a 46 per cent hike in sales.
Meanwhile, cash flow from operations more than doubled to £23.4m, compared with the same period last year, with a cash conversion rate of 144 per cent. The company drew down £63m in March as it braced for the fallout from coronavirus, which has now been fully repaid. Liquidity at the end of the period stood at £98m, of which £35m is in cash.
Peel Hunt forecasts adjusted pre-tax profits and adjusted EPS of £30.4m and 24.4p in the 2020 full year, rising to £38.3m and 30.7p in 2021.
| SDL (SDL) | ||||
| ORD PRICE: | 540p | MARKET VALUE: | £492.0m | |
| TOUCH: | 540-546p | 12-MONTH HIGH: | 640p | LOW: 367p |
| DIVIDEND YIELD: | nil | PE RATIO: | 23 | |
| NET ASSET VALUE: | 304p* | NET CASH: | £9m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 183 | 10.9 | 8.90 | nil |
| 2020 | 181 | 11.7 | 11.20 | nil |
| % change | -1 | +7 | +26 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £226.4m, or 248p a share | ||||
