Customer and Trading Update

Solution Dynamics Customer and Trading Update 11 December 2018
Solution Dynamics (SDL or Company) has reached agreement with a US-based multinational provider
of marketing communication services to SMEs, which will see SDL’s technology interfaced with that
company’s software packages supplied to vertical markets in the automotive, medical, spa & salon
and veterinary sectors globally. The agreement will see SDL’s international hybrid mail and
composition platform functionality included for rollout progressively to around 70,000 SMEs
globally, utilising SDL’s network of 300+ print suppliers across more than 50 countries obtained with
the DTP acquisition earlier in 2018. The initial annualised revenues are expected to be around NZ$2
million based on current requirements and implementation will commence during December.
SDL notes that it has recently lost a NZ contract (flow-wrap and digital print), with the loss to take
effect during the second half of the financial year. The contract was awarded to the incumbent
offset print provider, as part of a tender for the client’s entire business.
SDL is expecting to undertake a trial print run in April/May 2019, utilising the Company’s
international hybrid mail platform, for a portion of the printing for a multinational organisation. If
successful, it is likely that this will lead to a contract to manage the client’s entire global print and
mail distribution, plus some mail-related scanning. The parties are presently finalising the details
and terms of the trial print run. A full contract for all the organisation’s global mailings would
increase SDL’s annualised revenues by more than 50%, however, there is no contract currently in
place and there is no certainty that SDL will be successful. A further update on this will be provided
if commercial circumstances change or when the trial print run is complete.
Second half FY2019 revenue and earnings will also be boosted by a significant one-off software
development for an existing, major European client.
As previously flagged, the first half reported net profit is expected to be well down on the prior year
and the Directors now advise the result should be around $0.2 million. The Company has
undertaken a restructuring of its NZ operations to significantly reduce costs in the face of a more
difficult local print and mail volume environment, however, the ongoing growth in international
software and technology revenues has seen additional resources added to IT development and
support staff which will offset about two-thirds of savings in the print and mail house business.
Subject to the SME-related contract starting as scheduled and SDL successfully obtaining and
executing the trial print run for the multinational organisation, the Company now expects that
earnings for FY2019 will be approximately 15% lower than the prior year (previous guidance was for
reported earnings to decline 5-10%) although with a stronger second half than the prior year.
The Company plans to issue ESOP shares to two key members of the IT team (80,000 shares each).
These will be on similar terms to prior ESOP issuance with the ESOP strike price to be set following
the release of this announcement.
For further information please contact:
John McMahon Nelson Siva
Chairman Managing Director
+61-(0)410-411 806 +64-(0)21-415 027