Solution Dynamics gets approach for Service division

Solution Dynamics gets approach for Service division, mail processing

By Jonathan Underhill

June 26 (BusinessDesk) - Solution Dynamics, the software company that posted its first profit last year since going public, said it has been approached about a possible offer to buy its Service division.

It gave no details. “There is no certainty that this approach and any subsequent discussions will lead to any agreement being reached between the parties or a transaction occurring,” SDL said in a statement.

The Service business includes SDL’s mail processing and related activities which are in partnership with, and increasingly competing with, state-owned NZ Post, according to the company’s annual report.

Profit from SDL Services increased by $514,000 to about $2 million last year. At the time of its annual report SDL said full-year 2012 earnings before interest, tax, depreciation and amortization to rise to about $1.15 million.

But last month SDL cut its guidance. Ebitda for the year ending June 30 would be “significantly lower than this guidance. It is not possible to be more specific.”

The company said it has a number of sales awaiting board or management sign off but can’t be confident of when they may come to fruition. This had spurred the board and management effort at “intensively reviewing strategic options and that process will continue.”

SDL Services had performed as expected since the earlier guidance but the Software business “remains dependent on big and inconsistent sales.”

“The sales cycle in Europe has slowed and sales of our FujiFilm Australia solution have been much lower than budgeted. The prospects are still firm and we get good feedback on our technology,” SDL said last month.

The shares last traded at 26 cents on the NZAX, giving the company a market value of $3.4 million, and have dropped 26 percent this year. SDL had an initial public offering in 2004.

(BusinessDesk)

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