SDL FY2021 Financial Results & Final Dividend

Distribution Notice

Updated as at 18 December 2019



Please note: all cash amounts in this form should be provided to 8 decimal places

Section 1: Issuer information
Name of issuer Solution Dynamics Limited
Financial product name/description Ordinary Shares
NZX ticker code SDL
ISIN (If unknown, check on NZX
website)
NZSDLE0001S8
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies
Record date 17 September 2021
Ex-Date (one business day before the
Record Date)
16 September 2021
Payment date (and allotment date for
DRP)
1 October 2021
Total monies associated with the
distribution
1

$585,592.40 (14,639,810 shares @ $0.04000000
/share)
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.05555556
Gross taxable amount
3
$0.05555556
Total cash distribution
4
$0.04000000
Excluded amount (applicable to listed
PIEs)
n/a
Supplementary distribution amount n/a
Section 3: Imputation credits and Resident Withholding Tax
5

Is the distribution imputed Fully imputed

1
Continuous issuers should indicate that this is based on the number of units on issue at the date of the form
2
“Gross distribution” is the total cash distribution plus the amount of imputation credits, per financial product, before the deduction of
Resident Withholding Tax (RWT).
3
“Gross taxable amount” is the gross distribution minus any excluded income.
4
“Total cash distribution” is the cash distribution excluding imputation credits, per financial product, before the deduction of RWT.
This should include any excluded amounts, where applicable to listed PIEs.
5
The imputation credits plus the RWT amount is 33% of the gross taxable amount for the purposes of this form. If the distribution is
fully imputed the imputation credits will be 28% of the gross taxable amount with remaining 5% being RWT. This does not constitute
advice as to whether or not RWT needs to be withheld.

If fully or partially imputed, please
state imputation rate as % applied
6

28%
Imputation tax credits per financial
product
$0.01555556
Resident Withholding Tax per
financial product
$0.00277778
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
n/a
Start date and end date for
determining market price for DRP
n/a n/a
Date strike price to be announced (if
not available at this time)
n/a
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
n/a
DRP strike price per financial product
n/a
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
n/a
Section 5: Authority for this announcement
Name of person

authorised to make
this announcement
Chris Veale, Chief Financial Officer
Contact person for this
announcement
Chris Veale, Chief Financial Officer
Contact phone number +64 21 855142
Contact email address chrisve@solutiondynamics.com
Date of release through MAP

26 August 2021





6
Calculated as (imputation credits/gross taxable amount) x 100. Fully imputed dividends will be 28% as a % rate applied.

---

Results announcement
(for Equity Security issuer/Equity and Debt Security issuer)
Updated as at 17 October 2019


Results for announcement to the market
Name of issuer Solution Dynamics Limited
Reporting Period 12 months to 30 June 2021
Previous Reporting Period 12 months to 30 June 2020
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$35,445 4.2%
Total Revenue $35,445 4.2%
Net profit/(loss) from
continuing operations
$2,034 9.0%
Total net profit/(loss) $2,034 9.0%
Final Dividend
Amount per Quoted Equity
Security
$ 0.04000000
Imputed amount per Quoted
Equity Security
$0.01555556
Record Date 17 September 2021
Dividend Payment Date 1 October 2021
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.24733601 $0.22513953
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Refer to the Management Discussion & Analysis in the attached
Financial Statements
Authority for this announcement
Name of person

authorised
to make this announcement
Chris Veale
Contact person for this
announcement
Chris Veale
Contact phone number +64 21 855142
Contact email address chrisve@solutiondynamics.com
Date of release through MAP

26 August 2021

Audited financial statements accompany this announcement.

---

Simplifying Business
Annual Report 2021

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Annual
Shareholders
Meeting
2021 Key Points
> Record net profit after tax up 9%
to $2.03 million
> Earnings per share of 13.9 cents
(prior year 12.7 cents)
> Dividends per share of 11.0 cents
(prior year 9.0 cents)
> Revenue up 4% to $35.4 million
> EBITDA declined 3% to $4.2
million
> Net cash on hand $4.7 million
> Ongoing earnings growth
expected in FY2022
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The Annual Meeting of shareholders will
be held at 10:30am on Wednesday, 27th
October 2021, as an in-person meeting
in the Jupiter Meeting Room Solution
Dynamics Limited, 18 Canaveral Drive,
Albany, AUCKLAND, and as an online
meeting with details to be provided when
the Company provides the Notice of
Meeting to shareholders.

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2021 Key Points .....................................................................2
Management Discussion and Analysis ..................................................4
Independent Auditor’s Report ........................................................14
Consolidated Financial Statements for the
Year Ended 30 June 2021
Consolidated Statement of Profit or Loss ...............................................17
Consolidated Statement of Comprehensive Income .....................................17
Consolidated Statement of Financial Position ...........................................18
Consolidated Statement of Changes in Equity ..........................................19
Consolidated Statement of Cash Flows ................................................20
Notes to the Consolidated Financial Statements ........................................21
Statement of Corporate Governance ..................................................53
Company Directory .................................................................63
Contents
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Management Discussion
and Analysis
FY2021 Result Overview
Solution Dynamics Limited (“SDL” or “Company”) recorded a net profit after tax of $2.03 million for FY2021, a 9.0%
gain on $1.87 million in the prior FY2020 year. As noted in the FY2020 Annual Report, the prior year profit included
a net after tax gain of $0.23 million that is one-off in nature, so the normalised prior period profit for comparative
purposes is $1.63 million, meaning the FY2021 gain in earnings on this adjusted basis is 24.5%. The trend of growth
in international business from SDL’s Software & Technology platforms continues although FY2021 revenue growth
was limited to 11.9% almost solely the result of COVID-19. COVID caused a full year slump in UK revenues in
particular, with volumes in developing markets also constrained. This revenue pressure, combined with onboarding of
larger new customers, required additional IT development and support resources which saw Cost of Goods Sold rise
by 6.7% and Selling, General & Administration (“SG&A”) expenses increase again, although the FY2021 SG&A rise
was a more modest 1.9% versus the substantial rise of 47.5% the prior year.
Cash flow from operations was $2.61 million (FY2020 $5.77 million) and the net cash position at year end was $4.71
million (FY2020 $5.01 million). Part of the year-end cash position represents prepayment of postage by some clients
(around $1.2 million).
The directors have declared a final dividend of 4.0 cents per share (FY2020 6.0 cents) fully imputed, bringing total
dividends for FY2021 of 11.0 cents per share (FY2020 9.0 cents).
Effects of COVID-19
SDL has continued its COVID-19 monitoring and safety policies, aimed at ensuring the Company’s staff remained
safe. This includes the use of segregated teams as required, significant levels of working from home for non-
production staff, health monitoring, and controlled facility access. These have helped ensure no SDL staff member
has been infected by COVID-19 to date. These measures will likely remain in place until a vaccine is widely
implemented in New Zealand and proven to be effective, and some such as working from home are likely to become
a normal part of workplace practice. The Company deeply appreciates the efforts and cooperation by staff in their
flexibility, assistance and compliance with health requirements, and thanks them for perseverance and maintaining
morale in difficult operating circumstances.
It is difficult to accurately assess the financial impact of COVID-19 on SLD’s FY2021 financial result. The largest
effects were on volumes in the UK where SDL’s customers had significantly lower activity for the financial year (in
some cases down around 80%). Additionally, a large customer with international activities that has sizeable activity in
developing markets, was forced to scale back operations in many countries, reducing processing volumes. Less easily
measurable was the lack of direct sales activity in the US particularly. The Company’s best estimate is that COVID
reduced revenues by – very approximately – around 10-12%.
Some modest costs savings continued, with travel remaining near zero. However, COVID appears to be a factor in the
shortage of skills across the technology sector, adding cost pressures that are continuing in FY2022.
As noted in last year’s Annual Report, an SDL director, Mr Elmar Toime, has significant experience in the global
mail and logistics markets (former CEO of NZ Post, former Deputy Executive Chair of the Royal Mail Group, was
a Supervisory Board member of Deutsche Post DHL, and is a non-executive director of Qatar Post). He provided
specialised mail and logistics consulting advice to the Company during the COVID-19 period along with additional
support to SDL’s northern hemisphere operations during a period when travel from New Zealand has not been
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possible, along with the temporary absence of the CEO, Nelson Siva, for medical reasons. These services were
partly provided in FY2020 and continued for the early part of FY2021 but then ceased; they were provided on
normal commercial terms (refer Note 29).
Business Description
SDL operates in the Customer Communications market (essential mail, interactive marketing communications
and on-demand communications) across both the old economy print/mail house business and the new economy
document management business. The Company’s products and services are represented by two revenue streams:
• Services (split into Digital Print & Document Handling, and Outsourced Services); and
• Software & Technology.
Services operates solely in New Zealand. Digital Print & Document Handling revenues are generated from digital
printing and mail house processing for two categories of mail items: transactional mail, such as invoices and
statements; and direct marketing mail such as promotional material. These are then distributed through New
Zealand Post’s (“NZ Post”) mail delivery system. A number of the components included in this service, such as
envelopes and postage, form part of Outsourced Services revenues (which are typically very low margin activities).
Digital printing differs from traditional printing in that each document printed is typically personalised and unique.
Revenue from the Company’s scanning operation is included in Services (for New Zealand scanning operations),
while offshore consulting and software revenues that are related to SDL’s software technology are included in the
Software & Technology revenue stream.
Software & Technology develops and markets SDL’s own software products which include:
• digital asset management, with communication templates and campaign management;
• document archival;
• document composition;
• desktop mail solutions for “print on demand”;
• consulting and software revenue from scanning and scanning workflow; and,
• international cross-border print-on-demand management software.
Note that SDL has several different business models for international clients. For some, SDL only provides software
or related consulting services, but for others it also arranges third party printing and logistics on which it will
typically earn a modest margin. For these latter clients, the software charge and print/logistics margins are typically
aggregated into an overall charge to the customer. This means Software & Technology revenues are a mix of pure
software and software consulting revenues for some clients, while others also include third party printing and
logistics revenues that are generated from SDL’s software.
Transactional mail volumes in New Zealand and internationally are continuing to decline, although anecdotal
evidence suggests direct marketing mail is seeing less erosion. Some types of communications still remain better
suited to print and the usage level of printed versus electronic communications varies significantly across countries.
Technology such as DéjarMail (SDL’s print-on-demand desktop mail solution) can improve the handling efficiency,
management and cost of physical mail. The Company’s integrated range of print and software technologies means
it is able to offer a holistic and distribution channel/platform-agnostic approach to managing its customers’
communications needs.
The Company is headquartered in New Zealand with international operations in the UK, France and USA.
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International Expansion
Historically, SDL was predominantly a New Zealand digital print and mail house business with some international
software revenue. That position changed in FY2020, when SDL’s international revenue surpassed its New Zealand
revenue for the first time. Total Software & Technology revenue (some of which is revenue billed in New Zealand) as
a proportion of total revenue was around 70%.
The requirement to provide high levels of international customer service for software delivery and support
capability means SDL’s New Zealand technology staff are regularly called upon to provide after-hours support to
overseas customers and the Company’s international staff. Most of the Company’s software development team
are based in New Zealand (two are in the UK and one in the USA). SDL recognises the stress that international
expansion and time zone differences have placed on staff, both in New Zealand and globally, and has actively
increased the number of support, implementation and DevOps staff in the northern hemisphere.
Description and Review of Revenue Streams
SDL Services
SDL Services predominantly provides mail house operations to high-volume postal mail users in the business-to-
consumer sector. DéjarMail has expanded the market for SDL’s print and post service down to the SME (small
to medium enterprise) sector although the Company sells to this market through channel partners. SDL Services
operates leased, high-speed digital colour and monochrome printers. In addition to digital printing, Services also
provides the ancillary document handling operations such as automated envelope inserting and flow-wrap.
Services revenue also includes Outsourced Services, which encompasses a variety of outsourced functions or
components such as postage, third party offset printing, freight, paper and envelopes. The Company has an access
agreement with NZ Post which provides wholesale rates and bulk mail discounts off NZ Post’s retail rates, subject
to SDL meeting minimum volumes requirements. The profit margins on many of these outsourced components,
especially postage, are slim.
General mail volumes continue to decline albeit at what SDL estimates is a lower rate than the overall market fall;
SDL’s FY2021 mail lodgement volumes declining 8.8%, versus 15.8% the prior year. The Company’s digital print
volumes also fell slightly, declining 3.7%. SDL believes consolidation of mail house capacity is inevitable and is
confident it holds a strong competitive position in the market.
On the digital communications side, SDL’s volume of customer emails rose 7.6%.
Outsourced Services revenue in the following table is a combination of both very low margin postage and the
outsourced printing in the New Zealand operations.
SDL Services Revenue Breakdown FY2021 FY2020 Percentage
(all figures $000) Change
Digital Printing and Document Handling 4,161 4,568 -8.9%
Outsourced Services 6,649 7,450 -10.8%
Total Services Revenue 10,810 12,018 -10.1%
During the year, SDL renewed the lease contract on its print equipment and the Company believes it now has
highly competitive rates for its continuous digital printing equipment. Additionally, one of SDL’s major New Zealand
customers re-tendered its business during FY2021 and the Company re-secured the business for a further three
plus two year term. SDL has also gained business from a medium-sized regional authority that will contribute in
FY2022.
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SDL Software & Technology
Two trends continue to drive demand for SDL’s software. First is the digital transformation of communication
channels with the increasing ability for businesses to personalise their customer engagement. Secondly, cost and
efficiency pressures are causing businesses to optimise their communications channels, both digital and print. SDL’s
software platforms provide functionality to deliver on both these trends that may have been accelerated by COVID.
The digital transformation aspect has significant market competition in the purely digital sector, with technology
companies look to help businesses employ more “pull” marketing tactics, drawing people into their brands
with interesting, informative, and engaging content. Communication channels are no longer “one size fits all”;
customers now receive increasingly personalised messaging through multi-media channels. SDL treats each form of
communication – whether a customer email, an invoice or account statement, or a piece of marketing collateral – as
a means to enrich and deepen the personalised relationships that our customers have with their customers.
The second aspect – helping optimise both print and digital communications channels – is one where SDL appears
to have a greater degree of competitive advantage. The Company’s history in mail house, digital printing and
fulfilment means it understands the importance of, and requirements for, data accuracy, timely delivery and cost
efficiency. This is not simply a case of generating, printing and mailing a PDF. There are significant complexities
around personalised document creation and production for specialised, high volume print equipment, coupled with
personalised mail inserts, multi-part and multi-lingual documents, global routing for optimised multi-region printing,
and handling and management of mail returns, along with industry knowledge around optimising mail and logistics
costs. In addition, there are increasing data security and privacy regulations, including data integrity and document
management requirements. Delivering solutions in this domain requires a combination of digital document skills
and specialised global print and mail industry knowledge. SDL’s in-house production experience and how the
Company has coupled this with its in-house development (and in some cases acquisition) of software technology
has produced what it believes is effective technology with few global competitors.
SDL Software has six software engines or platforms that can be linked together in bespoke combinations to
develop customer-specific solutions:
1. Déjar
Déjar is a digital archival system that provides the ability to efficiently store and retrieve electronic documents
created from most formatting tools. Déjar allows users to exactly reproduce the original document and access
these via a browser over the local network or via the Internet. The reproduced document can be printed, faxed or
emailed and Déjar’s security and history features ensure every document created and subsequent access event is
recorded by User ID and date/time stamp.
2. Composer
Composer is SDL’s electronic document creation software. It is flexible and allows customised documents to
be built on the fly, based on information retrieved from databases. Based on templates it automatically creates
templates, documents and letters with dynamic, customised content, formatted to each customer’s requirements.
Composer allows companies to easily standardise corporate documentation formats for all users, including regional
and legal variations. Templates, documents, emails, letters and newsletters created by Composer are automated,
ready to archive, print, publish online, or electronically distribute to customers in one step.
3. Bremy
Bremy is an integrated, multi-channel publishing and distribution solution for businesses across a broad spectrum
of industries. It manages the workflow of digital assets, from document creation and revision, to final email or print-
ready files and distribution through multiple channels, including print, email, web, digital signage and mobile. It
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helps streamline and provides integrity to document proofing and integrates with data sources to produce complex
documents such as online or physical catalogues. It also has a Campaign Manager module to assist companies in
creating and managing specific advertising programmes.
4. DéjarMail (POD: Post on Demand)
DéjarMail is a desktop mail management solution which allows customers to route mail correspondence, by file
transfer or web browser portal (Post On Demand), to SDL or any other service provider for printing and delivery via
post or any other medium. This delivers costs savings for smaller businesses and for larger companies’ ad hoc mail.
5. Jupiter
Jupiter is a global print and mail solution that benefits Postal Administrators, senders and recipients, all via
a “Managed Print and Mail Solution”. Jupiter provides a technology platform which links together customer
communication origin points such as ERP, transactional and marketing output with production and fulfilment on a
globally distributed basis. Closely integrated with over 300 service providers globally, customers can use a highly
flexible web service API to achieve simultaneous concurrent fulfilment across five continents, all while retaining
visibility and control of the process via an intuitive and mobile friendly, web portal.
The scope for integration of the SDL product set, particularly DéjarMail Post on Demand, with Jupiter’s global
fulfilment network opens the door to expansion of the markets that SDL’s solutions can apply to.
6. Scantech scanning software
Scantech’s suite of software solutions include scanning applications to digitise physical documents, automated
extraction of data from documents (both physical and digital) including workflows for the processing of this data
and the automation of business processes such as accounts payable and accounts receivable. These are also
integrated into SDL products, such as Déjar for archival and retrieval.
Software & Technology has four broad revenue sources.
The first is as a SaaS (Software as a Service), where customers operate SDL’s software on a pay-as-you-go model.
This is normally by way of a per-document or per-electronic transaction charge and in many cases with a base
monthly fee. SDL will usually host the software on third party hosting infrastructure (such as Amazon Web Services
or Microsoft Azure) and may also archive related data on behalf of the client.
Secondly, the company offers bespoke software development where this is related to a customer using SDL’s
software. An example is a customer requiring a front end, web-based access portal to allow its clients to access
the underlying data being stored or managed by SDL’s software. In general, SDL prefers to provide generic
functionality that covers most customer use situations rather than building overly customer-bespoke infrastructure,
as this allows better ongoing management of SDL’s software base by mitigating excess complexity and the risk of
“technical debt”.
The third is the provision of programming, consulting, end-customer onboarding, business analysis and design
services that help clients to manage essential and marketing communications both physical and electronic.
The fourth is a total communications solution. This includes SDL providing print and mail/logistics through third
party partners that may not be in the same country as the customer. In this economic model, SDL does not usually
disaggregate software and services, but prices an integrated communications solution for the customer.
Software encompasses all international and New Zealand software revenue. It includes Déjar revenue in New
Zealand for digital document archival and management for SDL Services’ customers.
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SDL continues to invest in its software IP and current efforts are mainly focussed on functional development and
tighter integration amongst product platform engines. A number of the Company’s software products have been
developed in-house (e.g. DéjarMail Post-on-Demand) while others such as the Jupiter global distributed print
platform have been acquired. As SDL’s international expansion relies on channel partners, having these products
more closely integrated and easier to use by third parties is an increasing requirement as well as enabling SDL to
scale more effectively.
SDL has been assisted in its American growth initiative by a market development grant from NZ Trade and
Enterprise (“NZTE”) that contributed towards the costs of expansion. The NZTE grant was fully utilised during
FY2021. SDL appreciates the financial and market assistance it has received from NZTE.
Software & Technology generated revenue of $24.64 million in FY2021, an increase of 11.9% on the prior year’s
revenue of $22.01 million despite significant decline in UK revenues due to COVID. This growth was from several
sources including incremental revenue from a large multinational organisation that SDL secured around two years
ago (the bulk of the revenue from this client is from underlying print and logistics activity) plus a large US-based
multinational corporation that is progressively rolling out SDL’s Post on Demand and Jupiter platforms globally,
including incremental business as it transfers clients across to SDL. Mid-sized clients in the financial services sector
contributed strongly to US growth, while the UK continued to be COVID restrained (UK revenues in FY2021
declined approximately 50% on the prior year).
Financial Performance
SDL’s growth in revenue and earnings over FY2021 resulted from ongoing expansion of its international business,
predominantly in the US. The New Zealand business continued to struggle for revenue growth from the ongoing
structural decline in volumes and pricing pressure resulting from excess industry capacity, but remains sustainably
profitable.
Cost pressures offset the revenue growth and held Gross Profit flat on the prior year, with the modest increase in
SG&A reducing EBITDA by 3.2% to $4.21 million.
Summary Financial Performance FY2021 FY2020 Percentage
(all figures $000) Change
Total Revenue 35,445 34,030 4.2%
Less: Cost of Goods Sold 21,954 20,571 6.7%
Gross Profit 13,491 13,459 0.2%
Gross Margin (%) 38.1% 39.6%
Less: Selling, General & Admin (SG&A) 9,277 9,105 1.9%
EBITDA 4,214 4,354 -3.2%
EBITDA margin (%) 12.8% 12.8%
Depreciation 1,156 1,151 0.4%
Amortisation 283 330 -14.2%
EBIT 2,775 2,873 -3.4%
Net Interest 70 92 -23.9%
Income Tax 671 915 -26.7%
Net Profit after Tax 2,034 1,866 9.0%
Tax rate 24.8% 32.9%
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Note that the prior FY2020 result contained two material one-off items that produced a net gain after tax of $0.23
million. Deducting this from reported earnings produces a normalised profit (note this is a non-GAAP measure)
of $1.63 million, which the Directors believe provides a more accurate picture of how the Company’s underlying
operations performed. Part of the FY2020 one-off gain was from foreign exchange hedging that assisted the Gross
Profit and this largely explains the 150 basis point decline in Gross Margin in FY2021.
The following table highlights first and second half performance for the last two financial years.
SDL Half Financial Years 2H 2H Percent 1H 1H Percent
(all figures $000) FY2021 FY2020 Change FY2021 FY2020 Change
Total Revenue 16,923 18,245 -7.2% 18,522 15,785 17.3%
EBITDA 1,369 2,938 -53.4% 2,845 1,416 100.9%
EBITDA margin 8.1% 16.1% 15.4% 9.0%
Tax rate 9.9% 36.1% 29.5% 21.2%
Balance Sheet, Liquidity and Debt
SDL closed the year with net cash (i.e. cash net of interest bearing debt) on hand on $4.71 million (FY2020 $5.01
million). Note that this net cash figure excludes Right to Use Liabilities arising from the new Lease Accounting
standard; these liabilities are approximately offset by Right to Use Assets. As previously noted, the year-end cash
position is abnormally high from unusually favourable timing of year-end debtor and creditor (creditors are also
elevated at year end) cash flows, along with prepayment of (very low margin) postage by some clients (totalling
around $1.2 million). Given the increase in global health and macroeconomic risks the Directors intend retaining a
prudent approach to balance sheet management.
The Company maintains an overdraft arrangement from ANZ Bank with a $200,000 limit. This was unused during
FY2021.
Selected Balance Sheet and Cashflow Figures FY2021 FY2020 Change
(all figures $000)

Net Cash/(Debt & Borrowings) 4,713 5,012 -299
Non-Current Assets 1,816 2,310 -494
Right of Use Assets 1,210 1,406 -196
Net Other Assets/(Liabilities) (1,458) (2,304) 846
Right of Use Liabilities (1,346) (1,531) 185
Net Assets 4,935 4,893 42
Cashflow from Trading 2,372 2,292 80
Movement in Working Capital 236 3,474 -3,238
Cash Inflow from Operations 2,608 5,766 -3,158
Cash dividends paid 1,903 732 1,171
Capital expenditure for the year was modest at $0.749m, mainly for Right of Use Assets on capitalisation of a new
three year lease to update the New Zealand digital print production platform.
Net assets were broadly flat over the year. Net assets includes intangible assets of around $1.31 million of which
the bulk ($1.06 million) is goodwill and subject to an annual impairment test. The balance of intangibles represents
software and customer contracts from acquisitions which are being amortised.
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SDL operates with a largely neutral working capital balance although international expansion and larger “lumpier”
contracts means month-to-month and intra-month cash flow movements have wider fluctuations. The Directors
intend to maintain sufficient liquidity reserves to manage these short-term fluctuations.
Taxation and Dividends
SDL pays full New Zealand tax on locally generated earnings. The international business in FY2021 was able to
utilise some foreign tax losses from the prior year and this lowered the overall tax rate to 24.8% versus 32.9% the
prior year.
The Company’s US business is profitable after new business growth during the prior FY2020 saw the full utilisation
of remaining US tax losses. A portion of amortisation of acquired intangibles (relating to customer contracts and
some of the acquired software) is not tax deductible and this will bias the reported tax rate slightly upwards until
these are fully written off.
The Directors reiterate that SDL intends to pay dividends only to the extent that it can fully impute them and
also subject to the Company not experiencing any one-off requirements for abnormal capital expenditure or any
significant acquisition or investment activity.
Earnings and Dividends per Share FY2021 FY2020 Change
(all figures $000)

Shares on Issue (‘000) 14,640 14,640 0.0%
Reported Earnings per Share (cents) 13.89 12.75 9.0%
Dividend per Share (cents) 11.0 9.0 22.2.%
Dividend Proportion Imputed 100.0% 100.0%
Dividend Payout ratio 79.2% 70.6%
Dividend Payout ratio on NPATA 72.0% 62.6%
The final dividend of 4.0 cents per share is fully imputed and will be paid on 1 October 2021 (expected ex-date of
16 September 2021).
The number of shares on issue remained flat over the year. The Company operates an employee share option plan
(ESOP) for key staff. At year end there were four staff members in this plan with the right to 360,000 shares.
Risk Factors
The physical mail market in New Zealand is continuing its volume decline trend, especially for transactional mail
such as statements and bills. This has been exacerbated by COVID-19 increasing the emphasis towards electronic
communications and the Company believes it is placing further pressure on what is excess printing capacity in the
New Zealand mail house sector. Direct mail/marketing volumes have been more robust and SDL estimates have
shown modest to little decline. Anecdotal industry feedback suggests some industry participants are operating
at low levels of capacity utilisation. This is likely to force industry consolidation at some stage, although industry-
wide pricing and margin pressure may exacerbate before this eventuates. This risk to SDL is partly mitigated by the
Company’s ability to add value through its technology offerings. The Company has several key domestic contracts
that, if lost, could place material pressure on local profitability although much of this is under medium-term contract
(and SDL renewed a major print and mail contract for a multi-year term during FY2021). While SDL expects that
consolidation in the New Zealand print market is inevitable, and has held industry rationalisation discussions with
other participants in the print sector, the Company will not participate unless there is clear value enhancement for
shareholders.
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SDL’s top five customers (both domestic and international) provided 49.5% of the Company’s revenue in FY2021
with the largest customer accounting for 28.7% of revenue. Loss of one or more of those customers would cause
financial results to differ materially from those outlined in the FY2022 Outlook section below.
The Company’s software provides critical document management, distributed print, and storage functions for its
clients. SDL needs to ensure it continues to maintain appropriate levels of software development quality control
and sufficient, well-trained staff for software delivery and support. Cyber and data security is a known high risk
area The Company regularly reviews its IT and data security arrangements with external advisors.
The Company operates a single site facility for its New Zealand print and mail house production, with an offsite for
data and server backup. The Directors are conscious of the operational risk a single site implies for digital imaging
and mail house operations. SDL has a reciprocal disaster recovery (“DR”) plan with another printer, as well as
backup capability with a division of its major print equipment supplier.
The Company mainly relies on distribution channel partners to market its software products into the UK, Europe
and the US. This means SDL has little or no contact with many of the end user customers of its products. While
these channel partner arrangements are currently stable there is not guarantee these arrangements will continue.
SDL will continue to ensure its software meets channel partner requirements. The Company has invested in a
limited number of sales people in the UK/Europe and the US.
SDL reiterates comments from the “Effects of COVID-19” section above. At present, the Company sees ongoing
growth from recent customer and contract wins as sufficient to support future growth expectations. However,
the global environment (both in health and economic terms) remains extremely uncertain and this could materially
affect SDL in unforeseen ways.
FY2022 Outlook
SDL confirms previously providing guidance for FY2022 reported net profit of around $2.5 million. This guidance
assumes growth rates in North America continue and some recovery in UK volumes during the second half of the
financial year as that economy begins to normalise from the effects of COVID-19.
The Company expects some customers to continue seeing reduced physical communication volumes, especially
those involved in developing markets, and this will remain a drag on earnings during FY2022. Some costs, especially
in various areas of technology, continue to see pressure and skill shortages; these factors are not expected to abate
during FY2022. The Company has invested significantly in personnel in recent years (both in New Zealand and
internationally) and the skills and staff now in place should be capable of supporting a step change in growth. SDL
expects sufficient organic growth, coupled with growth in business from new and recent customers, to more than
offset the COVID drag and increased cost structure.
Significant volatility remains possible in the range of earnings outcomes for FY2022. The Directors continue to
monitor the world health and macroeconomic outlooks for risk. COVID has made international sales a slower and
more complex process, however, SDL has the software platforms and customer support infrastructure to maintain
growth momentum.
| 12 |

| 13 |
Key Financial Trend Metrics
Revenue ($000)
Revenue CAGR (10 yr) 12.4%
Software CAGR (10 yr) 20.8%
Print/Mail CAGR (10 yr) 4.0%
Net Profit ($000)
Reported net profit. Note no tax was payable in
FY12, FY13 and FY14.
EBITDA ($ 000)
CAGR (10 year) 30.3%
EBITDA is as reported in financial statements, noting
this is affected by the change of accounting standard to
NZ IFRS 16 (accounting for leases) in FY20 (increases
reported EBITDA) so FY20 onwards is not comparable
with prior years.
Dividends
Cents per share (excludes imputation credits).
All dividends have been fully imputed.
FY12
Software & TechnologyPrint/Mailhouse
FY12FY12
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
6,000
5,000
4,000
3,000
2,000
1,000
0
16.0%
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
2,500
2,000
1,500
1,000
500
0
-500
-1000
12.00
10.00
8.00
6.00
4.00
2.00
0.00
FY12FY16
FY16FY16
FY16FY14
FY14FY14
FY14FY18
FY18FY18
FY18FY20
FY20FY20
FY20FY13
FY13FY13
FY13FY17
FY17FY17
FY17FY15
FY15FY15
FY15FY19
FY19FY19
FY19FY21
FY21FY21
FY21
2.7%
5.3%
7.7%
8.5%
10.4%
10.4%
10.0%
9.2%
12.8%
11.9%

| 14 |
Grant Thornton New Zealand Audit Limited

L4, Grant Thornton House
152 Fanshawe Street
PO Box 1961
Auckland 1140

T +64 9 308 2570
www.grantthornton.co.nz






Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.







To the Shareholders of Solution Dynamics Limited
Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of Solution Dynamics Limited and its subsidiaries (the Group) on pages
17 to 52 which comprise the consolidated statement of financial position as at 30 June 2021, and the consolidated statement
of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of the Group as at 30 June 2021 and its financial performance and cash flows for the year then ended in accordance with New
Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) issued by the New Zealand Accounting
Standards Board.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued by the New
Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our firm carries out other assignments for the Group in the area of taxation advice and services. The firm has no other interest
in the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.



Independent Auditor’s Report

Grant Thornton New Zealand Audit Limited

L4, Grant Thornton House
152 Fanshawe Street
PO Box 1961
Auckland 1140

T +64 9 308 2570
www.grantthornton.co.nz






Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.







To the Shareholders of Solution Dynamics Limited
Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of Solution Dynamics Limited and its subsidiaries (the Group) on pages
17 to 52 which comprise the consolidated statement of financial position as at 30 June 2021, and the consolidated statement
of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of the Group as at 30 June 2021 and its financial performance and cash flows for the year then ended in accordance with New
Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) issued by the New Zealand Accounting
Standards Board.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued by the New
Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our firm carries out other assignments for the Group in the area of taxation advice and services. The firm has no other interest
in the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.



Independent Auditor’s Report

| 15 |
Grant Thornton New Zealand Audit Limited

L4, Grant Thornton House
152 Fanshawe Street
PO Box 1961
Auckland 1140

T +64 9 308 2570
www.grantthornton.co.nz






Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.







To the Shareholders of Solution Dynamics Limited
Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of Solution Dynamics Limited and its subsidiaries (the Group) on pages
17 to 52 which comprise the consolidated statement of financial position as at 30 June 2021, and the consolidated statement
of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of the Group as at 30 June 2021 and its financial performance and cash flows for the year then ended in accordance with New
Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) issued by the New Zealand Accounting
Standards Board.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued by the New
Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our firm carries out other assignments for the Group in the area of taxation advice and services. The firm has no other interest
in the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.



Independent Auditor’s Report

Grant Thornton New Zealand Audit Limited

L4, Grant Thornton House
152 Fanshawe Street
PO Box 1961
Auckland 1140

T +64 9 308 2570
www.grantthornton.co.nz






Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.







To the Shareholders of Solution Dynamics Limited
Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of Solution Dynamics Limited and its subsidiaries (the Group) on pages
17 to 52 which comprise the consolidated statement of financial position as at 30 June 2021, and the consolidated statement
of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of the Group as at 30 June 2021 and its financial performance and cash flows for the year then ended in accordance with New
Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) issued by the New Zealand Accounting
Standards Board.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued by the New
Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our firm carries out other assignments for the Group in the area of taxation advice and services. The firm has no other interest
in the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.



Independent Auditor’s Report

Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
Key audit mattersOur procedures to address the key audit matter
Carrying Value of Goodwill
The Group has significant goodwill of $1,061,000
arising from historical acquisitions of businesses.
Goodwill is allocated across the Groupssoftware cash
generating units. Any risk of downturn in the
macroeconomic environment could result in an
indicator of impairment to thegoodwillbalance. The
inherent uncertainty involved in forecasting and
discounting future cash flows is one of the key
judgement areas that our audit concentrated on. The
uncertainty is affected by severalfactors including
generalmarket trends, current environment and
economic factors such asimpact of theCOVID19
global pandemic, the number of new customersand
future demand for the softwaresolutions. All which
form the basis for assessment ofthe carrying valueof
the goodwill balance.
For this key audit matterour audit procedures included assessment
of the Group’s forecast and budgeting proceduresused to form the
basis for value in use calculations. We also compared the Group’s
historical budget to actual performance and its future projections
compared to prior year actualresultsand tested the
reasonableness of forecasting assumptions. In addition, we
performed our own assessments in relation to key inputs such as
projected revenue growth, cost and overhead inflationexpectations
and discount ratesused.
We further evaluated thereasonableness where changes to inputs,
methodology or assumptions from the prior yearhave occurred.
We also assessed whether the Group’s disclosures about the
sensitivity in key assumptions fairly reflected the risks inherent in
the carrying value of the goodwillbalance.
Accuracyofrevenue
TheGrouprecognisedrevenueof$34.3million(2020:
$32.1 million) for the year ended 30 June 2021
comprising sale of goods and rendering ofservices
undercontract. The principal risk associated with
revenue relates to recognition and recoverability.
There are several factors that could affect revenue
including:
•Delivery may not have occurred before year
endresulting in recorded sales being
recognised in the incorrect accounting
period.
•Revenues recognised from contract sales of
products and services may be at a point in
time or over time with reference to the
various performance obligations existing with
customers.
•Revenue may include estimates and
judgements that impact the amount of
revenue recognised.
For the key audit matter our audit procedures included evaluating
the Group’s recognition of revenue by assessing the procedures
and controls in place and ensuringappropriate revenue recognition
policies have been applied. In relationto sales cut-off, we
performed detailed substantive testing on sales recognised or
adjusted either side of year end to substantiate the appropriate
terms of the relevant contracts had been satisfied in line with
contract performance obligations.
Our audit work included assessing performance obligations of any
significant projects or contracts including the delivery of the goods
to ensure appropriate revenue recognition.
For contracts recognised at a point in time we inspected a sample
of delivery notes, invoices raised and cash receipts.
For contracts recognised over time we reperformed the calculation
of any material revenue to be recognised at year end and agreed
the assumptions used in determining the various performance
obligations to supportingdocumentation.
Other Information
The Directors are responsible for all other information included in the Group’s Annual Report. The other information comprises
2021 key points, Management Discussion and Analysis, Statement of Corporate Governance and the Company Directory,
included in the annual report, but does not include the consolidated financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
audit opinion or assurance conclusion thereon.

| 16 || 16 |


Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Directors’ Responsibilities for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial
statements in accordance with New Zealand equivalents to International Financial Reporting Standards issued by the New
Zealand Accounting Standards Board, and for such internal control as the Directors determine is necessary to enable the
preparation of {consolidated} financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible on behalf of the Group for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no
realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the financial statements is located on the External
Reporting Board’s website at: https://xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
Restriction on use of our report
This report is made solely to the Group’s shareholders, as a body. Our audit work has been undertaken so that we might state
to the Group’s shareholders, as a body those matters which we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Group and the Group’s shareholders, as a body, for our audit work, for this report or for the opinion we have formed.
Grant Thornton New Zealand Audit Limited



VJ Black
Auckland

26 August 2021
Grant Thornton New Zealand Audit Limited

L4, Grant Thornton House
152 Fanshawe Street
PO Box 1961
Auckland 1140

T +64 9 308 2570
www.grantthornton.co.nz






Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.







To the Shareholders of Solution Dynamics Limited
Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of Solution Dynamics Limited and its subsidiaries (the Group) on pages
17 to 52 which comprise the consolidated statement of financial position as at 30 June 2021, and the consolidated statement
of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of the Group as at 30 June 2021 and its financial performance and cash flows for the year then ended in accordance with New
Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) issued by the New Zealand Accounting
Standards Board.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued by the New
Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our firm carries out other assignments for the Group in the area of taxation advice and services. The firm has no other interest
in the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.



Independent Auditor’s Report

| 17 |
Consolidated Statement of
Profit or Loss
For the year ended 30 June 2021
Consolidated Statement of
Comprehensive Income
For the year ended 30 June 2021
Net profit after income tax 2,034 1,866
Items that may be reclassified subsequently to profit and loss:
Exchange gain on translation of foreign operations (91) (53)
Other comprehensive (loss) / income net of tax (91) (53)
Total comprehensive income for the year 1,943 1,813
2021
$000Note
2021
$000
2020
$000
2020
$000
Revenue 4 34,302 32,140
Other income 4 1,143 1,890
Total revenue 35,445 34,030
Expenses 5 31,231 29,676
Earnings before interest, tax, depreciation & amortisation (EBITDA) 4,214 4,354
Depreciation 17/18 1,156 1,151
Amortisation of intangible assets (software) 19 283 330
Net interest (income) 7 70 92
Profit before income tax 2,705 2,781
Income tax 8 671 915
Net profit after income tax 2,034 1,866
Cents Cents
Basic earnings per share 9 13.9 12.7
Diluted earnings per share 9 13.6 12.6
The accompanying notes on pages 21 - 52 form part of the consolidated financial statements.


Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
Directors’ Responsibilities for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial
statements in accordance with New Zealand equivalents to International Financial Reporting Standards issued by the New
Zealand Accounting Standards Board, and for such internal control as the Directors determine is necessary to enable the
preparation of {consolidated} financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible on behalf of the Group for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no
realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the financial statements is located on the External
Reporting Board’s website at: https://xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
Restriction on use of our report
This report is made solely to the Group’s shareholders, as a body. Our audit work has been undertaken so that we might state
to the Group’s shareholders, as a body those matters which we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Group and the Group’s shareholders, as a body, for our audit work, for this report or for the opinion we have formed.
Grant Thornton New Zealand Audit Limited



VJ Black
Auckland

26 August 2021
Grant Thornton New Zealand Audit Limited

L4, Grant Thornton House
152 Fanshawe Street
PO Box 1961
Auckland 1140

T +64 9 308 2570
www.grantthornton.co.nz






Chartered Accountants and Business Advisers
Member of Grant Thornton International Ltd.







To the Shareholders of Solution Dynamics Limited
Report on the Audit of the Consolidated Financial Statements

Opinion
We have audited the consolidated financial statements of Solution Dynamics Limited and its subsidiaries (the Group) on pages
17 to 52 which comprise the consolidated statement of financial position as at 30 June 2021, and the consolidated statement
of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position
of the Group as at 30 June 2021 and its financial performance and cash flows for the year then ended in accordance with New
Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) issued by the New Zealand Accounting
Standards Board.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued by the New
Zealand Auditing and Assurance Standards Board. Our responsibilities under those standards are further described in the
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of
the Group in accordance with Professional and Ethical Standard 1 International Code of Ethics for Assurance Practitioners
(including International Independence Standards) (New Zealand) issued by the New Zealand Auditing and Assurance
Standards Board and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional
Accountants (including International Independence Standards) (IESBA Code), and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our firm carries out other assignments for the Group in the area of taxation advice and services. The firm has no other interest
in the Group.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of the
consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.



Independent Auditor’s Report

| 18 |
Consolidated Statement of
Financial Position
As at 30 June 2021
Current Assets
Cash and cash equivalents 10 4,713 5,012
Trade & other receivables 12 5,574 4,838
Inventories and work in progress 11 164 267
Prepayments 853 200
Total Current Assets 11,304 10,317
Current Liabilities
Trade creditors 3,183 2,511
Other current liabilities 13 4,138 4,131
Other non-financial liabilities 14 81 72
Deferred tax liability 8 (161) 229
Lease liability - current 16 863 802
Employee benefit liabilities 15 808 666
Total Current Liabilities 8,912 8,411
Working Capital 2,392 1,906
Non-Current Assets
Capital works in progress 195 188
Property, plant & equipment 17 307 525
Right of use assets 18 1,210 1,406
Intangible assets 19 253 536
Goodwill 20 1,061 1,061
Total Non-Current Assets 3,026 3,716
Non-Current Liabilities
Lease liability 16 483 729
Total Non-Current Liabilities 483 729
Net Assets 4,935 4,893
Equity
Share capital 21 5,413 5,413
Employee share option plan 30 31 29
Foreign currency translation reserve (159) (68)
Accumulated losses 22 (350) (481)
Total Equity 4,935 4,893
For and on behalf of the Board who approved these financial statements for issue on 26 August 2021.
John McMahon – Director Andy Preece – Director
(Chairman) (Chairman Audit & Risk Management Committee)
2021
$000
2020
$000Note
The accompanying notes on pages 21 - 52 form part of the consolidated financial statements.

| 19 |
Consolidated Statement of
Changes in Equity
For the year ended 30 June 2021
Balance 30 June 2019 5,413 7 (15) (1,615) 3,790
Issue of shares to employees - 22 - - 22
Transactions with owners - 22 - - 22
Profit for the year after tax - - - 1,866 1,866
Dividend paid - - - (732) (732)
Other comprehensive (loss) - - (53) - (53)
Total comprehensive income - - (53) 1,134 1,081
Balance 30 June 2020 5,413 29 (68) (481) 4,893
Issue of shares to employees - 2 - - 2
Transactions with owners - 2 - - 2
Profit for the year after tax - - - 2,034 2,034
Dividend paid - - - (1,903) (1,903)
Other comprehensive (loss) - - (91) - (91)
Total comprehensive income - - (91) 131 40
Balance 30 June 2021 5,413 31 (159) (350) 4,935
Accumulated
Losses
$000
Share
Capital
$000
Employee
Share Plan
$000
Total
Equity
$000
Currency
Translation
Reserve
$000
The accompanying notes on pages 21 - 52 form part of the consolidated financial statements.

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Consolidated Statement of
Cash Flows
For the year ended 30 June 2021
Cash Flow from Operating Activities
Cash was provided from:
Receipts from sales 35,389 35,296
Other revenue 1,143 1,890
36,532 37,186
Cash was applied to:
Payments to suppliers 22,696 21,560
Payments to employees 10,594 8,730
GST paid to Inland Revenue 634 1,130
33,924 31,420
Net Cash Inflow from Operating Activities 24 2,608 5,766
Cash Flow from Investing Activities
Cash was applied to:
Purchase of property, plant and equipment & capital works in progress 749 216
Purchase of software & intangible assets - 6
749 222
Net Cash Outflow from Investing Activities (749) (222)
Cash Flow from Financing Activities
Cash was provided from:
Finance lease additions 600 -
Exercise of employee share options - -
600 -
Cash was applied to:
Payment of dividends 1,903 732
Interest paid 70 124
Finance lease liabilities 785 858
2,758 1,714
Net Cash (Outflow) from Financing Activities (2,158) (1,714)
Net change in cash and cash equivalents (299) 3,830
Add cash and cash equivalents held at beginning of year 5,012 1,182
Cash and cash equivalents at end of year 10 4,713 5,012
2021
$000
2020
$000Note
The accompanying notes on pages 21 - 52 form part of the consolidated financial statements.

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Notes to the Consolidated Financial Statements
For the year ended 30 June 2021
1. CORPORATE INFORMATION
The consolidated financial statements of Solution Dynamics Limited (SDL or Company) and its subsidiaries,
Solution Dynamics International Limited, Solution Dynamics Incorporated and Déjar International Limited
(collectively the Group) for the year ended 30 June 2021 were authorised for issue in accordance with a
resolution of directors on 26 August 2021.
Solution Dynamics Limited is a public company incorporated and domiciled in New Zealand and is listed
with the New Zealand Stock Exchange on the NZX. The registered office is located at 18 Canaveral Drive,
Albany in Auckland.
The Group offers a range of integrated solutions encompassing data management, electronic digital
printing, document distribution, web presentment and archiving, fulfilment, traditional print services,
scanning, data entry and document management.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Statement of Compliance
The consolidated financial statements of the Group comply with New Zealand Equivalents to International
Financial Reporting Standards (NZ IFRS) and International Financial Reporting Standards (IFRS) as
appropriate for a profit orientated entity.
2.2 Basis of Preparation
2.2.1 Basis of Preparation
The consolidated financial statements have been prepared on the historical cost basis but modified, where
applicable, by the measurement of fair value of selected financial assets and financial liabilities. Accounting
policies are selected and applied in a manner which ensures that the resulting financial information
satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying
transactions or other events is reported. The principal accounting policies are set out below.
2.2.2 Basis of Consolidation
The consolidated financial statements have been prepared in compliance with generally accepted
accounting practice in New Zealand (NZ GAAP), the requirements set out in Part 7 of the Financial
Markets Conduct Act 2013 as a reporting entity, the Main Board Listing Rules of the NZX, the Companies
Act 1993, and other authoritative pronouncements issued by the New Zealand Accounting Standards
Board (NZ ASB).For the purposes of complying with NZ GAAP the Group is a for-profit entity that has
followed the Tier 1 for – profit reporting requirements set out by the External Reporting Board, in its
“Accounting Standards Framework.”
All subsidiaries have a 30 June reporting date and consistent accounting policies are applied.
The acquisition method is used to prepare the consolidated financial statements, which involves adding
together like items of assets, liabilities, income and expenses on a line-by-line basis. All transactions and
balances between Group companies are eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies.
The consolidated financial statements have been prepared under the assumption that the Group operates
as a going concern.

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2.2.3 Rounding of Amounts
Amounts in the consolidated financial statements have been rounded off to the nearest $000 unless
otherwise specified.
2.2.4 Changes in Accounting Policies and Disclosures
Except as described below, the accounting policies and disclosures are consistent with those of the
previous year.
SPECIFIC ACCOUNTING POLICIES
The following specific accounting policies, which significantly affect the measurement of financial performance,
financial position and cash flows, have been applied.
2.3 Foreign Currency
2.3.1 Functional and Presentation Currency
Items included in the consolidated financial statements are measured using the currency of the primary
economic environment in which the entity operates (the ‘functional currency’). The consolidated financial
statements are presented in New Zealand dollars, which is the Group’s functional and presentational
currency and expressed in $000’s.
2.3.2 Transaction and Balances
Foreign currency transactions are translated into the functional currency using the exchange rates
prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at the exchange rate at that
date. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation of period end exchange rates of monetary assets and liabilities denominated in foreign
currencies are recognised in the Consolidated Statement of Profit or Loss.
2.4 Revenue Recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is reduced for
estimated customer returns, rebates and other similar allowances.
2.4.1 Sale of Goods
To determine whether to recognise revenue at a point in time or over time, an assessment has been
undertaken using the 5-step process set out in NZ IFRS 15:
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when and as its performance obligation(s) are satisfied.
The Group often enters into transactions involving a range of the Group’s products and services, for
example the delivery of mailing services involves a blend of physical material (paper stock and envelopes)
along with the provision of data and other services to process and deliver the finished job for lodgement
to NZ Post. In all cases, the total transaction price for a contract is allocated amongst the various stages of
the project based on their relative stand-alone selling prices. The transaction price for a contract excludes
any amounts collected on behalf of third parties. However, these constitute one performance obligation
due to them being highly integrated and non-distinct.
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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Revenue is recognised either at a point in time or over time, when (or as) the Group satisfies performance
obligations by transferring the promised goods or services to its customers.
To depict the progress by which SDL transfers control of the products and services to the customer, and
to establish when and to what extent revenue can be recognised, SDL measures its progress towards
complete satisfaction of the performance obligation by measuring outputs completed to date. This basis
provides the most faithful depiction of the transfer of goods and services to each customer due to SDL’s
ability to accurately measure the units produced and delivered to the customer.
Items where revenue is recognised as arising at the time of delivery include the sale of goods, usually
envelopes and paper, and the sale of right to use licences. In both cases title and the risks and rewards
of ownership have been transferred to the customer. No revenue is recognised if there are significant
uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods,
or where there is continuing management involvement with the goods when the performance obligation
has been satisfied. No revenue is recognised if there are significant uncertainties regarding recovery of
the consideration due, associated costs or the possible return of goods, or where there is continuing
management involvement with the goods when the performance obligation has been satisfied.
2.4.2 Interest Revenue
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the
expected life of the financial asset to that asset’s net carrying amount.
2.4.3 Government Grants
Government grants are recognised as revenue when the conditions attached to the grant have been met.
Where there are unfilled conditions attaching to the grant, the amount relating to the unfilled condition is
recognised as a liability and released to revenue as the conditions are met.
2.5 Leases
The Group considers whether a contract is or contains a lease. A lease is defined as ‘a contract, or part of a
contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for
consideration’.
To apply this definition the Group assesses whether the contract meets three key evaluations which are
whether:
• the contract contains an identified asset, which is either explicitly identified in the contract or
implicitly specified by being identified at the time the asset is made available to the Group
• the Group has the right to obtain substantially all of the economic benefits from use of the identified
asset throughout the period of use, considering its rights within the defined scope of the contract
• the Group has the right to direct the use of the identified asset throughout the period of use.
The Group assess whether it has the right to direct ‘how and for what purpose’ the asset is used
throughout the period of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognises a right-of-use asset and a lease liability on the
statement of financial position. The right-of-use asset is measured at cost, which is made up of the initial
measurement of the lease liability, any initial direct costs incurred by the Group, an estimate of any costs
to dismantle and remove the asset at the end of the lease, and any lease payments made in advance of the
lease commencement date (net of any incentives received).

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The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date
to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group
also assesses the right-of-use asset for impairment when such indicators exist.
Lease payments included in the measurement of the lease liability are made up of fixed payments
(including in substance fixed), variable payments based on an index or rate, amounts expected to be
payable under a residual value guarantee and payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for
interest. It is remeasured to reflect any reassessment or modification, or if there are changes in in-
substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset,
or profit and loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical
expedients. Instead of recognising a right-of-use asset and lease liability, the payments in relation to
these are recognised as an expense in profit or loss on a straight-line basis over the lease term. The Group
currently has no short-term or low value leases.
On the statement of financial position, right-of-use assets have been included in a separate asset class.
2.6 Employment Benefits
The Group recognises liabilities for benefits accruing to employees in respect of wages and salaries, annual
leave, long service leave and sick leave when it is probable that settlement will be required, and they are
capable of being measured reliably.
Provisions made in respect of employee benefits expected to be settled within 12-months of each
reporting date are measured at their nominal values using the remuneration rate expected to apply at the
time of settlement.
Provisions made in respect of employee benefits which are not expected to be settled within 12-months
of each reporting date are measured as the present value of the estimated future cash outflows to be
made by the Group in respect of services provided by employees up to the reporting date.
2.7 Share-based Payments
Equity-settled share-based payments to employees are measured at the fair value of the equity
instruments at the grant date. Details regarding equity settled share-based transactions is set out in note
30.
The fair value determined at the grant date of the equity settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that will
eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments
expected to vest.
The impact of the revision of the original estimates, if any, is recognised in the Consolidated Statement of
Profit or Loss over the remaining period, with a corresponding adjustment to the equity-settled employee
benefits reserve.
2.8 Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax.
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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2.8.1 Current Tax
The tax currently payable is based on the taxable profit for each reporting period. The taxable income
or loss differs from the amount as reported in the Consolidated Statement of Profit or Loss because it
excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the financial year end, and any adjustment to tax
payable in respect of previous years.
2.8.2 Deferred Tax
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit and is
accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable
temporary differences, and deferred tax assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences associated with investments
in subsidiaries and associates, except where the Group is able to control the reversal of the temporary
difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments and
interests are only recognised to the extent that it is probable that there will be sufficient taxable profits
against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted
or substantively enacted at each reporting date. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Group expects, at the
reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current
tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation
authority and the Group intends to settle its current tax assets and liabilities on a net basis.
2.8.3 Current and Deferred Tax for Each Reporting Period
Current and deferred tax are recognised as income or an expense within the Consolidated Statement
of Profit or Loss, except when they relate to items credited or debited directly to equity, in which case
the tax is also recognised directly in equity, or where they arise from the initial accounting for a business
combination. In the case of a business combination, the tax effect is taken into account in calculating
goodwill or in determining the excess of the acquirer’s interest in the net fair value of the acquiree’s
identifiable assets, liabilities and contingent liabilities over the cost of the business combination.

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2.9 Goods and Services Tax (GST)
Revenue, expenses, assets and liabilities are recognised net of the amount of goods and service tax (GST),
except:
• where the amount of GST incurred is not recovered from the taxation authority, it is recognised as part of
the cost of acquisition of an asset or as part of an item of expense; or
• for receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, Inland Revenue is included as part of receivables or
payables.
2.10 Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment
losses, if any. Cost includes all expenditure that is directly attributable to the acquisition of the asset. Software
that is integral to the functionality of the related equipment is capitalised as part of the asset.
Depreciation is charged so as to write off the cost of assets over their estimated useful lives, using the
straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the
end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
The principal depreciation rates used in the reporting periods are:
• Leasehold Improvements 6.5 – 7.8%
• Furniture and Fittings 8.5 – 39.6%
• Plant and Machinery 7.0 - 30.0%
• Computer Equipment 20.0 – 36.0%
The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is
determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognised in the Consolidated Statement of Profit or Loss.
2.11 Intangible Assets
2.11.1 Intangible Assets Acquired with a Finite Life
Intangible assets with a finite life, acquired separately are reported at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is charged on a straight-line basis over their estimated useful
lives. The estimated useful life and amortisation method are reviewed at the end of each annual reporting
period, with the effect of any changes in estimate being accounted for on a prospective basis.
2.11.2 Internally Generated Intangible Assets with a Finite Life
Expenditure on research activities is recognised as an expense in the Consolidated Statement of Profit or Loss
in the period in which it is incurred.
An internally generated intangible asset arising from development (or from the development phase of an
internal project) is recognised if, and only if, all of the following have been demonstrated:
• the technical feasibility of completing the intangible asset so that it will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• how the intangible asset will generate probable future economic benefits;
• the availability of adequate technical, financial and other resources to complete the development and to
use or sell the intangible asset; and
• the ability to measure reliably the expenditure attributable to the intangible asset during its development.
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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The amount initially recognised for internally generated intangible assets is the sum of the expenditure
incurred from the date when the intangible asset first meets the recognition criteria listed above. Where
no internally generated intangible asset can be recognised, development expenditure is charged as an
expense to the Consolidated Statement of Profit or Loss in the period in which it is incurred.
Subsequent to initial recognition, internally generated intangible assets are reported at cost less
accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets
acquired separately.
Amortisation is charged on a straight-line basis over the estimated useful lives of internally generated
intangible assets. The estimated useful life and amortisation method are reviewed at the end of each
annual reporting period, with the effect of any changes in estimate being accounted for on a prospective
basis.
2.11.3 Subsequent Measurement
All intangible assets, including capitalised internally developed software, are accounted for using the cost
model whereby capitalised costs are amortised on a straight-line basis over their estimated useful lives, as
these assets are considered finite. Residual values and useful lives are reviewed at each reporting date. In
addition, they are subject to impairment testing as described in Note 2.13. The following useful lives are
applied:
• Software 3-5 years.
2.11.4 Intangible Assets Acquired in Business Combination
Intangible assets acquired in a business combination are identified and recognised separately from
goodwill where they satisfy the definition of an intangible asset, are identifiable and their fair values can
be measured reliably. The cost of such intangible assets is their fair value at the acquisition date.
Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost
less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets
acquired separately.
• Customer contracts 3–4 years.
2.12 Goodwill
Goodwill arising on the acquisition of a “business” as defined in NZ IFRS 3 Business Combinations
represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the
identifiable assets and liabilities of the business recognised at the date of acquisition. Goodwill is initially
recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment
losses.
2.13 Impairment of Assets
At each reporting date, the Group reviews the carrying amounts of its tangible and finite life intangible
assets to determine whether there is any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an
individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the
asset belongs.
Intangible assets with indefinite useful lives, goodwill and intangible assets not yet available for use are
tested for impairment annually, and whenever there is an indication that the asset may be impaired.

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Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount.
An impairment loss is recognised immediately as an expense within the Consolidated Statement of Profit
or Loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating
unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss
been recognised for the asset (or cash-generating unit) in prior years. Any impairment loss associated with
goodwill will not be reversed in a subsequent reporting period.
2.14 Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other
short term, highly-liquid investments with original maturities of three months or less that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
2.15 Inventories
Inventories are stated at the lower of cost and net realisable value. Costs are assigned to inventories by
the method most appropriate to the particular class of inventory, with the majority being valued on a
first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all
estimated costs of completion and costs necessary to make the sale.
2.16 Financial Instruments
2.16.1 Recognition and Derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks and rewards are transferred. A financial
liability is derecognised when it is extinguished, discharged, cancelled or expires.
2.16.2 Classification and Initial Measurement of Financial Assets
Except for those trade receivables that do not contain a significant financing component and are measured
at the transaction price in accordance with NZ IFRS 15, all financial assets are initially measured at fair
value adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into the
following categories:
• amortised cost
• fair value through profit or loss (FVTPL)
• fair value through other comprehensive income (FVOCI).
In the periods presented the corporation does not have any financial assets categorised as FVOCI and
FVTPL.
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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The classification is determined by both:
• the entity’s business model for managing the financial asset
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented
within finance costs, finance income or other financial items, except for impairment of trade receivables
which is presented within other expenses.
2.16.3 Subsequent Measurement of Financial Assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not
designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its
contractual cash flows
• the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding
After initial recognition, these are measured at amortised cost using the effective interest method.
Discounting is omitted where the effect of discounting is immaterial. The Group’s cash and cash
equivalents, trade and most other receivables fall into this category of financial instruments as well as
listed bonds that were previously classified as held-to-maturity under NZ IAS 39.
2.16.4 Classification and Measurement of Financial Liabilities
The Group’s financial liabilities include borrowings, trade and other payables and derivative financial
instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs
unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method
except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair
value with gains or losses recognised in profit or loss (other than derivative financial instruments that are
designated and effective as hedging instruments). All interest-related charges and, if applicable, changes
in an instrument’s fair value that are reported in profit or loss are included within finance costs or finance
income.
2.16.5 Impairment of Financial Assets
NZ IFRS 9’s impairment requirements use more forward-looking information to recognise expected credit
losses – the ‘expected credit loss (ECL) model’. Instruments within the scope of the new requirements
included loans and other debt-type financial assets measured at amortised cost and FVOCI, trade
receivables, contract assets recognised and measured under NZ IFRS 15 and loan commitments and some
financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
Recognition of credit losses is no longer dependent on the Group first identifying a credit loss event.
Instead the Group considers a broader range of information when assessing credit risk and measuring
expected credit losses, including past events, current conditions, reasonable and supportable forecasts
that affect the expected collectability of the future cash flows of the instrument.

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In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial recognition
or that have low credit risk (‘Stage 1’) and
• financial instruments that have deteriorated significantly in credit quality since initial recognition and
whose credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit
losses’ are recognised for the second category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit
losses over the expected life of the financial instrument.
2.17 Share Capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares
or options are shown in equity as a deduction from the proceeds, net of tax.
2.18 Trade Payables and Other Current Liabilities
These amounts represent liabilities for goods and services provided to the Group prior to the end of the
annual reporting period which are unpaid. The amounts are unsecured and are usually paid within 60
days of recognition. These are measured initially at fair value net of transaction costs, subsequently at
amortised cost using the effective interest rate method.
2.19 Statement of Cash Flows
The following terms are used in the Statement of Cash Flows:
Operating activities: are the principal revenue producing activities of the Group and other activities that
are not investing or financing activities.
Investing activities: are the acquisition and disposal of long-term assets and other investments not
included in cash equivalents.
Financing activities: are activities that result in changes in the size and composition of the contributed
equity and borrowings of the entity.
Non-cash financing and investing activities: There were no transactions which have had a material effect
on assets and liabilities that did not involve cash flows and are disclosed in the statement of cash flows.
2.20 New IFRS standards and interpretations issued but not yet adopted
At the date of authorisation of these financial statements, several new, but not yet effective
interpretations to existing standards had been published by the IASB and XRB. None of these
amendments to existing Standards have been adopted early by the Group.
Management anticipates that all relevant pronouncements will be adopted for the first period beginning
on or after the effective date of the pronouncement. New Standards, amendments and Interpretations not
adopted in the current year have not been disclosed as they are not expected to have a material impact on
the Group’s financial statements.
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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3. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF
ESTIMATION UNCERTAINTY
In the application of the Group’s accounting policies, which are described in Note 2, the Directors are
required to make judgements, estimates and assumptions about the carrying amounts of assets and
liabilities that are not readily apparent from other sources. The estimates and associated assumptions are
based on historical experience and other factors that are considered to be relevant. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting
estimates are recognised in the period in which the estimate is revised if the revision affects only that
period, or in the period of the revision and future periods if the revision affects both current and future
periods.
3.1 Annual Goodwill Impairment Testing
Determining whether goodwill is impaired requires an estimation of the value in use of the Electronic
Content Management cash-generating unit which is also known as SDL Software. The value in use
calculation requires the Directors to estimate the future cash flows expected to arise from this cash
generating unit and a suitable discount rate in order to calculate present value.
The carrying value of goodwill at each reporting date was $1,061,000 (2020: $1,061,000).
The recoverable amount of $938,000 of goodwill associated with the acquisition of the Déjar and Bremy
businesses has been determined based on a value in use model applying the budget, approved by the
Directors covering the reporting period to 30 June 2022, and forecast sales based on assessments of the
current market opportunities through existing distribution channels net of forecast costs, through to the
end of 2026, at a post-tax discount rate of 10.2% (2020: 10.2%). Cash flows beyond 2026 have been
taken into account by the calculation of a terminal value.
The revenue assumptions used for the forecast period are based on management expectations supported
by existing prospects for the budget period and allow for growth of 2.5% (2020: 2.5%) per annum over
the balance of the forecast period. The assumptions are subject to fundamental uncertainties, particularly
those surrounding future license sales which comprise a substantial portion of projected revenues and
hence only inflationary growth rates have been applied. Gross margin is forecast to be consistent through
the budget and forecast period.
In determining whether there was any impairment of goodwill associated with the SDL Software
operations, forecasts were prepared based on estimates for all the products sold in each market.
Goodwill of $123,000 is associated with the acquisition of the Scantech and DTP business (2020:
$123,000). This has similarly been tested for impairment through a review of revenue and earnings
forecasts for the financial year ended 30 June 2021. Refer to note 20 for Directors’ judgements and
estimates.

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3.2 Right-of-use assets
At inception of a contract, SDL uses judgement in assessing whether a contract is, or contains, a lease. A
contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration. To assess whether a contract conveys the right to control
the use of an identified asset, SDL assesses whether:
• The contract involves the use of an identified asset;
• SDL has the right to obtain substantially all of the economic benefits from use of the asset throughout
the period of use; and
• SDL has the right to direct the use of the asset.
At inception or on reassessment of a contract that contains a lease component, SDL allocates the
consideration in the contract to each lease component on the basis of their relative stand-alone prices.
SDL recognises a right-of-use asset at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments
made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs
to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is
located, less any lease incentives received.
In assessing the lease liability an incremental borrowing rate is applied to lease liabilities recognised under
NZ IFRS 16. This is 4.5% (2020: 4.5%) for property and 8.5% (2020: 8.5%) on plant & equipment.
The right-of-use asset is subsequently depreciated using the straight-line method from the
commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the
lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of
property and equipment. In addition, the right-of-use asset is periodically assessed for impairment losses
and adjusted for certain remeasurements of the lease liability.
4. REVENUE & OTHER INCOME
2021 2020
$000 $000
Revenue recognised over time 32,079 30,651
Revenue recognised at a point in time 2,223 1,489
Revenue 34,302 32,140
Government grant revenue 486 534
Gain on foreign exchange 657 1,356
Other Income 1,143 1,890

Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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5. EXPENSES
Note 2021 2020
$000 $000
Acquisition related costs - -
Auditor’s remuneration 6 64 67
Bad debts - 27
Freight, postage & external print 5,420 6,179
Directors’ remuneration - directors’ fees 29 793 570
Research 1,415 1,077
Salaries 7,673 7,621
Superannuation (KiwiSaver) 547 321
Employee entitlements – share based payments 2 22
Donations 48 1
Other expenses 15,269 13,791
Total Operating Expenses 31,231 29,676
6. AUDITOR’S REMUNERATION
2021 2020
$000 $000
Audit fees – statutory audit 64 67
Tax compliance and advisory services 18 32
Total auditor’s remuneration 82 99
7. INTEREST
2021 2020
$000 $000
Interest on financing of right of use assets 70 92
Net interest paid 70 92
8. INCOME TAX EXPENSE
8.1 Current Tax
2021 2020
$000 $000
Income tax expense comprises:
Current tax expense 1,061 1,136
Deferred tax expense relating to the origination and
reversal of temporary differences (390) (221)
Total tax expense 671 915

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Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021
8. INCOME TAX EXPENSE CONTINUED
8.1 Current Tax
2021 2020
$000 $000
The total charge for the reporting period can be reconciled to the accounting loss as follows:
Net profit before income tax 2,705 2,781
Income tax at company tax rate (1) 757 778
Permanent differences 6 14
Under / (over) provision in prior years 96 (31)
Benefit of tax losses not recognised - 103
Other (122) 60
Utilisation of previously unrecognised tax losses (66) (9)
Income tax expense 671 915
(1) The Group tax rate of 28% (2020: 28%) has been used. This is the tax rate applicable to the territory where Solution Dynamics Limited, the
primary tax paying entity, is domiciled.
At 30 June 2021 there are imputation credits available of $727,026 (2020: $713,000) for use in
subsequent reporting periods.
8.2 Deferred Tax Liability
2021 2020
$000 $000
Temporary differences
Depreciable and amortisable assets 60 192
Accruals and provisions (221) 37
Deferred tax recognised (161) 229
Deferred tax assets arising from deductible temporary differences are only recognised to the extent that
it is probable that taxable profits will be available against which the deductible temporary differences can
be utilised.
2021 2020
$000 $000
Deferred tax liability movement
Balance at beginning of period 229 8
Current year movement through profit or loss (390) 221
Balance at end of period (161) 229

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9. EARNINGS PER SHARE (EPS)
2021 2020
$000 $000
Net profit for the year attributable to ordinary shareholders 2,034 1,866
Basic
Weighted average number of ordinary shares (000’s) 14,640 14,640
Cents Cents
Basic earnings per share 13.9 12.7
Basic earnings per share is calculated by dividing the net profit after tax attributable to equity holders of
the Company by the weighted average number of ordinary shares outstanding during the reporting period,
adjusted for bonus elements in ordinary shares issued during the reporting period.
Diluted
Weighted average number of ordinary shares (000’s) 14,640 14,640
Adjustment for share options 360 160
Weighted average 15,000 14,800
Cents Cents
Diluted earnings per share 13.6 12.6
Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all potentially dilutive ordinary shares. Options are convertible into
the Company’s shares and are therefore considered dilutive securities for diluted earnings per share.
10. CASH AND CASH EQUIVALENTS
2021 2020
$000 $000
Cash and cash equivalents 4,713 5,012
Total 4,713 5,012
Solution Dynamics has an overdraft facility in place with the ANZ Bank at an interest rate of 6.95% p.a.
(2020: 6.95%). This facility is to support the operational requirements of the Group, is interest only and is
secured by first ranking debenture over the assets of the Group.
At period end, the ANZ Bank has imposed no financial covenants to secure the existing facilities. The
Group maintains a $200,000 overdraft facility that was unused at the reporting date (2020: $200,000).
The Group now holds a net cash position with no bank debt (2020: $Nil).
At the end of the reporting period the Bank provided commercial guarantees totalling $65,000 (2020:
$65,000) to the Group’s suppliers.

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Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021
11. INVENTORIES AND WORK IN PROGRESS
2021 2020
$000 $000
Work in Progress 106 190
Inventory 58 77
Total Inventories and Work in Progress 164 267
12. TRADE & OTHER RECEIVABLES
2021 2020
$000 $000
Trade receivables 5,252 3,666
Credit loss allowance (5) (40)
5,247 3,626
Allowance for credit notes (6) (6)
Total trade receivables 5,241 3,620
Forward foreign exchange contract receivable - 648
Sundry debtors 333 570
Total Trade & Other Receivables 5,574 4,838
Trading terms & aging of past due trade receivables
The Group’s trading terms require settlement by the 20th of the month following the date of invoice. At
the reporting date the Group had past due debtors of $880,000 (2020: $718,000) for which an allowance
of $5,250 (2020: $40,246) was made. With overage receivables at 16.8% of total receivables (2020:
19.6%) there has not been a significant change in credit quality, therefore the amounts are considered
recoverable. The Group does not hold any collateral over these balances.
2021 2020
$000 $000
30 – 60 days 138 278
60 – 90 days 246 258
90 – 120 days 496 182
Total overdue trade receivables 880 718
Movement in allowance for credit losses
2021 2020
$000 $000
Balance at the beginning of the reporting period 40 22
Accounts written off as uncollectable (35) 18
Total allowance for credit losses 5 40

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In assessing the recoverability of trade receivables, the Group considers any change in the quality of
the trade receivables from the date that the credit was initially granted up to the reporting date. The
concentration of credit risk is limited with the largest customer comprising 31% (2020: 26%) of the gross
trade receivable balance, of which all was current. 86% of the outstanding balance is less than 60 days
old (2020: 88%). Accordingly, the directors believe that no further adjustments for credit are required in
excess of the allowance for credit losses.
For the reporting period there are no provisions against third parties (2020: $Nil).
The directors do not consider there to be any expected credit loss in addition to the credit losses recorded
above.
Forward foreign exchange contract receivable
As at 30 June 2021 the Group held no forward foreign exchange contracts (2020: selling USD3.73 million
and purchasing GBP and NZD).
13. OTHER CURRENT LIABILITIES
2021 2020
$000 $000
Sundry creditors 1,249 1,062
Payroll accruals 349 682
Provision for tax 676 672
Provision for deferred income 1,789 1,654
Audit fees accrued 75 61
Total Other Current Liabilities 4,138 4,131
14. OTHER NON-FINANCIAL LIABILITIES
2021 2020
$000 $000
PAYE 161 162
GST (80) (90)
Total Non-Financial Liabilities 81 72
15. EMPLOYEE BENEFIT LIABILITIES
2021 2020
$000 $000
Provision for sick pay 2 2
Provision for long service leave 139 114
Provision for holiday pay 667 550
Total Employee Benefit Liabilities 808 666
Provisions for sick and long service leave are based on the Group’s estimate of the present value of future
costs assuming payroll inflation rate of 2.0% (2020: 2.0%).

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16. LEASES
2021 2020
$000 $000
Current 863 802
Non-current 483 729
1,346 1,531
The Group has property leases for its Canaveral Drive office and production facility, an IT infrastructure
disaster recovery site also in Auckland and a sales office in North America. In addition to property leases,
the Group has two leases for its production imaging equipment in Auckland.
The table below describes the nature of the Groups leasing activities by right of use asset type recognised
on the balance sheet.
Right of use (ROU) assets No of ROU Range of Average
assets leased remaining term remaining term
Property 3 2-14 months 7-months
Plant & equipment 2 2 – 3 years 2-years
There is one property with a right of early termination on the payment of a break penalty. No agreements
have a right to purchase or have extension options.
The lease liabilities are secured by the related underlying assets. Future minimum lease payments at 30
June 2021 were as follows:
Right of use (ROU) assets Within
1 Year 1 - 2 years 2 - 5 years After 5 years Total
$000 $000 $000 $000 $000
30 June 2021
Lease payments 863 420 152 - 1,435
Finance charges 61 23 5 - 89
Net present values 802 397 147 - 1,346
30 June 2020
Lease payments 802 650 160 - 1,612
Finance charges 41 31 9 - 81
Net present values 761 619 151 - 1,531
There are no short-term leases (leases with a term of 12-months or less) or leases of low value assets that
the Group has not recognised as right of use assets.
At 30 June 2021 the Group had not committed to any leases that were yet to commence.
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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17. PROPERTY, PLANT AND EQUIPMENT
Plant & Furniture Leasehold
Machinery & Fittings Improvements Total
$000 $000 $000 $000
Cost
Balance 1 July 2019 2,564 157 646 3,367
Additions 165 2 12 179
Disposals - - - -
Balance 30 June 2020 2,729 159 658 3,546
Additions 47 - 7 54
Disposals - - - -
Balance 30 June 2021 2,776 159 665 3,600
Accumulated depreciation
Balance 1 July 2019 2,136 143 459 2,738
Depreciation expense 200 4 79 283
Disposals - - - -
Balance 30 June 2020 2,336 147 538 3,021
Depreciation expense 196 4 72 272
Disposals - - - -
Balance 30 June 2021 2,532 151 610 3,293
Carrying amount
Balance 1 July 2019 428 14 187 629
Balance 30 June 2020 393 12 120 525
Balance 30 June 2021 244 8 55 307

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18. RIGHT OF USE ASSETS
Right of Use Right of Use
Assets Property Assets Plant Total
$000 $000 $000
Cost
Balance 1 July 2019 2,438 807 3,245
Balance 30 June 2020 2,438 807 3,245
Additions - 600 600
Disposals (102) (653) (755)
Balance 30 June 2021 2,336 754 3,090
Accumulated depreciation
Balance 1 July 2019 582 303 885
Depreciation expense 651 303 954
Balance 30 June 2020 1,233 606 1,839
Depreciation expense 585 299 884
Disposal (102) (653) (755)
Adjustment
(1)
(8) (80) (88)
Balance 30 June 2021 1,708 172 1,880
Carrying amount
Balance 1 July 2019 1,856 504 2,360
Balance 30 June 2020 1,205 201 1,406
Balance 30 June 2021 628 582 1,210
Note (1) Adjustments arise from variations in lease term
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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19. IDENTIFIABLE INTANGIBLES, FINITE LIFE
Software Software Customer
- Dejar - Bremy Software Contracts Total
$000 $000 $000 $000 $000
Cost
Balance 1 July 2019 2,090 110 1,732 441 4,373
Transfers - - - - -
Additions - purchased - - 6 - 6
Balance 30 June 2020 2,090 110 1,738 441 4,379
Transfers - - - - -
Additions - purchased - - - - -
Balance 30 June 2021 2,090 110 1,738 441 4,379
Accumulated amortisation
Balance 1 July 2019 2,090 110 1,164 149 3,513
Transfers - - - - -
Amortisation expense - - 207 123 330
Balance 30 June 2020 2,090 110 1,371 272 3,843
Transfers - - - - -
Amortisation expense - - 168 115 283
Balance 30 June 2021 2,090 110 1,539 387 4,126
Carrying amount
Balance 1 July 2019 - - 568 292 860
Balance 30 June 2020 - - 367 169 536
Balance 30 June 2021 - - 199 54 253
(i) Déjar software (intellectual property) includes software costs of $1,400,000 purchased from Efactor and Déjar Holdings.
20. GOODWILL
Scantech DTP Déjar Bremy Total
$000 $000 $000 $000 $000
Balance at beginning of year 66 57 215 723 1,061
Net carrying amount 66 57 215 723 1,061
Goodwill has arisen on the acquisition of businesses previously controlled by Déjar Holdings Limited,
Bremy Limited, Scantech Limited and DigitalToPrint. For impairment testing purposes, goodwill is
determined to be associated with the SDL Software cash generating unit.
No accumulated impairment losses have been recognised against the goodwill.
The carrying value of goodwill relating to the Déjar and Bremy acquisitions is tested on an annual basis
through assessment of the value-in-use of the SDL Software cash generating unit. The cash flows used
in the value-in-use calculations are based firstly on the management budget for the 2022 year followed
by management forecasts over a further four-year period. Cash flows after 2026 have been taken into
account through a terminal value calculation. Management has projected growth in sales for the Déjar
and Bremy products at 2.5% per annum for the 2023-2026 forecast period because it reflects inflation.
Growth above inflation has not been projected due to there being uncertainty around this.

| 42 |
The pre-tax discount rate used in the impairment calculation is 13.1% (2020: 13.2%). The equivalent post-
tax nominal rate for the forecast cash flows is 10.2% (2020: 10.2%). In the Directors’ view this represents
the rate that the market would expect on an investment of equivalent risk. There has been no impairment
in the reporting period (2020: $Nil).
Goodwill of $123,000 has arisen from deferred tax on business combinations associated with the
Scantech Limited and DigitalToPrint acquisitions. Following a review of forecast cash flows for the 2022
budget period the Directors’ judgement is that there are no indicators of impairment at reporting date.
20.1 Sensitivity to Changes in Assumptions
As at 30 June 2021, the date of the Group’s annual impairment test, the estimated recoverable amount
of the Déjar and Bremy indefinite life intangible assets exceeded their carrying amount by $17,701,000
(2020: $4,874,000).
It is the judgement of Directors that reasonable changes in the foreseeable future to growth rates and
discount rates (sensitivity analysis) does not result in an impairment loss for these assets.
21. SHARE CAPITAL
2021 2020
$000 $000
Ordinary Shares
Balance at beginning of year 5,413 5,413
Exercise of employee share options - -
Share Capital at End of Year 5,413 5,413
The Company had 14,639,810 (2020: 14,639,810) ordinary shares on issue as at 30 June 2021. All
ordinary shares ranked equally with one vote attached to each fully paid ordinary share and share equally
in dividends and surplus on winding up.
22. ACCUMULATED LOSSES
2021 2020
$000 $000
Balance at beginning of reporting period (481) (1,615)
Net operating profit after income tax 2,034 1,866
Exercise of employee share options - -
Payment of dividends (1,903) (732)
Accumulated Losses at end of reporting period (350) (481)
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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23. EMPLOYEE REMUNERATION
Remuneration includes salaries, bonuses and other benefits including non-cash benefits. The number of
employees with total remuneration exceeding $100,000 in each of the following bands was:
2021 2020
$000 $000
$100,000 to $109,999 2 5
$110,000 to $119,999 5 4
$120,000 to $129,999 1 -
$130,000 to $139,999 3 1
$140,000 to $149,999 1 -
$150,000 to $159,999 - 1
$160,000 to $169,999 - 1
$170,000 to $179,999 1 2
$180,000 to $189,999 1 3
$200,000 to $209,999 2 2
$210,000 to $219,999 1 -
$220,000 to $229,999 1 -
$250,000 to $259,999 - -
$260,000 to $269,999 - 1
$270,000 to $279,999 1 1
$340,000 to $349,999 1 1
$350,000 to $359,999 1 -
$430,000 to $439,999 - 1
$540,000 to $549,999 1 -
$670,000 to $679,999 1 -
Total staff with remuneration exceeding $100,000 23 23
24. RECONCILIATION OF NET LOSS AFTER INCOME TAX FOR
YEAR WITH NET CASH INFLOW FROM OPERATING ACTIVITIES
2021 2020
$000 $000
Net profit / (loss) after income tax 2,034 1,866
Adjustments:
Depreciation and amortisation of assets 1,439 1,481
(Gain) on foreign exchange (657) (1,356)
Bad and doubtful debts (35) 19
Interest expense (reclassified as financing activity) 70 92
Other non-cash items (479) 190
Cash flow from trading 2,372 2,292

| 44 |

Add movements in working capital:
(Increase) in trade & other receivables (717) (1,541)
Decrease in inventories and work in progress 52 143
(Increase) in prepayments (586) (139)
Increase in other current liabilities 997 3,769
Increase / (Decrease) in other non-financial liabilities 9 (368)
Increase in trade creditors 672 803
(Decrease) / increase in employee benefit liabilities (191) 807
Total movement in working capital 236 3,474
Net Cash Flows from Operating Activities 2,608 5,766
25. SEGMENT INFORMATION
The Group operates in one business segment, the supply of customer communication solutions. These
include a range of integrated document management products and services separated into three streams;
outsource services, technology & development services, intelligent imaging and output services. Specific
elements of these streams are as follows:
• Software & Technology, Solution Dynamics owns the intellectual property in five products;
»Déjar, an online digital archival and retrieval system sold stand-alone under licence agreements and
also as a hosted service in New Zealand and Internationally.
» Bremy, Digital asset management, workflow and multichannel publishing software sold as a licenced
product and also as a hosted service in New Zealand, Australia and the UK.
»Composer, “On-Demand” content creation software.
»DéjarMail, is a web browser-based desktop mail management solution which allows customers to
route mail correspondence to SDL or any other service provider for printing and delivery.
»Jupiter is a hybrid mail application that was acquired through the purchase of the DigitalToPrint
business. The application routes data received from clients for international distribution of
communications to the destination country for print production and lodgement as local mail.
In addition to owning the intellectual property for the above products, Solution Dynamics provides
programming, consulting and design services that help clients to distribute marketing and essential
communications by mail and electronically. The provision of these services is covered under this category.
Grant income (NZTE / R&D) and foreign exchange gains / (losses) are related to the software business
segment and included in this revenue group.
• Digital Printing & Document Handling Services, the printing of client’s information digitally using high
speed laser printers followed by the lodgement and distribution of those documents using a variety of
machine and other processes.
• Outsourced Services, not all components of Solution Dynamics’ solutions are produced internally.
External elements such as post, freight, paper and envelopes are sourced from external suppliers and
included in this service stream. Solution Dynamics has long term arrangements with a number of key
suppliers such as NZ Post for the provision of these services.
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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An overhead structure including sales, marketing and administration departments provides services for all
of the above revenue streams.
There are no reconciling items in this note due to the management information provided to the Chief
Operating Decision Maker, the CEO Nelson Siva, being compiled using the same standards and accounting
policies as those used to prepare the financial statements.
Segment Consolidated Statement of Profit or Loss
2021 2020
$000 % $000 %
Software & Technology 24,635 70% 22,012 65%
Digital Printing & Document Handling Services 4,161 12% 4,568 13%
Outsourced services 6,649 18% 7,450 22%
Total revenue 35,445 100% 34,030 100%
Less cost of sales 21,954 62% 20,571 60%
Gross margin 13,491 38% 13,459 40%
Selling, general & administration 9,277 26% 9,105 27%
Earnings before interest, tax, depreciation & amortisation 4,214 12% 4,354 13%
Less:
Depreciation 1,156 3% 1,151 3%
Amortisation 283 1% 330 1%
Interest 70 0% 92 0%
Tax 671 2% 915 3%
Operating profit 2,034 6% 1,866 6%
Segment Assets
Assets are not segmented between service streams.
Information about Major Customers
Included in revenues for the Group of $35.45 million (2020: $34.03 million) are revenues of $9.86 million
(2020: $8.28 million) which arose from sales to the Group’s largest customer.
Geographical Information
The Group has customers in New Zealand, Australia, United States of America and Europe.
Revenue from Non-current
external customers assets
2021 2020 2021 2020
$000 $000 $000 $000
New Zealand 14,667 16,687 2,999 3,613
Australia 426 484 - -
United States of America 18,291 12,625 15 50
Europe 2,061 4,234 12 53
Total 35,445 34,030 3,026 3,716

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26. CONTINGENT LIABILITIES
There were no contingent liabilities at reporting date for the Group (2020: $Nil).
27. CAPITAL COMMITMENTS
The Group had no capital commitments at the reporting date (2020: $Nil).
28. FINANCIAL INSTRUMENTS
28.1 Credit Risk
Financial instruments that potentially subject the Group to concentrations of credit risk consist principally
of trade & other receivables. The maximum credit risk is the carrying value of these financial instruments;
however, the Group does not consider the risk of non-recovery of these accounts to be material.
In the normal course of its business the Group incurs credit risk from trade receivables and transactions
with financial institutions. The Group has a credit policy, which is used to manage this exposure to credit
risk. As part of this policy, credit evaluations are performed on all customers requiring credit. The Group
does not have any significant concentrations of credit risk, excluding the single largest customer referred
to in Note 12. This customer is not viewed as a credit risk due to trading and payment history. The Group
does not require any collateral or security to support financial instruments as it only deposits with, or loans
to banks and other financial institutions with credit ratings of no less than AA-. It does not expect the non-
performance of any obligations that are not provided for at reporting date.
28.2 Categories of Financial Instruments
2021 2020
$000 $000
Financial Financial
Assets & Assets &
liabilities at liabilities at
amortised cost amortised cost
Assets
Cash & cash equivalents (Note 10) 4,713 5,012
Trade & other receivables (Note 12) 5,574 4,838
Total Financial Assets 10,287 9,850
Total non-financial assets 4,043 4,183
Total Assets 14,330 14,033
Finance Liabilities
Trade creditors 3,183 2,511
Other current liabilities (Note 13) 4,138 4,131
Total Financial Liabilities 7,321 6,642
Lease liability – right of use assets 1,346 1,531
Total non-financial liabilities 728 967
Total Liabilities 9,395 9,140
The carrying values of the financial instruments above are equivalent to their fair values.
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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28.3 Maturity Date of Financial Instruments
Weighted
average Gross
effective Less than 1 - 3 3 months 1 - 5 Nominal Carrying
interest rate 1 month months to 1 year years outflow Value
($000) ($000) ($000) ($000) ($000) ($000)
2021
Non-interest bearing n/a 4,623 2,698 - - 7,321 7,321
4,623 2,698 - - 7,321 7,321
2020
Non-interest bearing n/a 3,791 2,098 753 - 6,642 6,642
3,791 2,098 753 - 6,642 6,642
28.4 Interest Rates
The following table details the Group’s weighted average effective interest rates for financial liabilities at
reporting date.
2021 2020
Financial Liabilities:
Finance facility (overdraft rate) 6.95% 6.95%
28.5 Foreign Currency Risk Management
Hosting and license sales linked to SDL Software operations are denominated in foreign currency and sold
under standard terms and conditions. Any variation in exchange rate between the date of sale and the
date cash is received is accounted for as a foreign exchange gain/loss in the period in which it occurs. For
material individual transactions in foreign currencies the Group has a policy of taking forward exchange.
At 30 June 2021 of total trade receivables of $5,252,000 (2020: $3,666,000) a total of $3,776,000 (2020:
$2,085,000) was in foreign currencies. $150,000 (2020: $235,000) of the foreign currency receivables
were denominated in European currencies, $3,526,000 (2020: $1,761,000) in US $ with the remainder of
the balance in AUD $.
In addition to the trade receivables of $3,776,000 (2020: $2,085,000) held in foreign currencies at the
end of the reporting period, a further $4,057,000 (2020: $4,143,000) in cash was also held in foreign
currencies, a total of $7,883,000 (2020: $6,228,000). Adjusted for offsetting payables balances of
$4,947,000 (2020: 3,976,000), a movement in the exchange rate of 10% would give rise to an exchange
fluctuation of $294,000 (2020: $225,000).
Trading operations for the UK and Europe are largely undertaken through SDL’s UK subsidiary Solution
Dynamics International Limited (SDIL). For North America operations are undertaken through Solution
Dynamics Incorporated. At period end the net assets for SDIL and SD Inc., comprising largely working
capital, was a credit balance of NZ$872,000 (2020: NZ$153,000) with cash and receivable balances as
noted above.
At 30 June 2021 the reporting date, $Nil forward exchange contracts were held (2020: $5,785,000), on
which an unrealised gain of $Nil (2020: $648,000) is recognised at the reporting date.

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28.6 Liquidity Risk Management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built
an appropriate liquidity risk management framework for the management of the Group’s short, medium
and long-term funding and liquidity management requirements. The Group manages liquidity risk by
maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously
monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and
liabilities. With positive cash inflows, the Group’s liquidity risk is considered by the Directors to be low.
28.7 Interest Rate Sensitivity Analysis
At 30 June 2021 the interest rate on the overdraft facility was 6.95% (2020: 6.95%). With a net cash
position of $4,71 million (2020: $5.01 million) at the end of the reporting period a material change in the
interest expense is not expected.
28.8 Capital Management
The Group manages its capital to ensure that the Group will be able to continue as a going concern while
maximising the return to shareholders through the optimisation of the debt and equity balances.
Earnings in the Group has improved on the prior year. The Group is in a net cash position of $4.71 million
(2020: $5.01 million) and a net cash inflow from operations of $2.61 million (2020: $5.77 million). There
was an operating profit of $2.03 million in the current year (2020: $1.87 million). The Group has no
externally imposed covenants to manage, the only debt on the balance sheet relates to right of use assets.
2021 2020
$000 $000
Borrowings – Liability right of use assets (1,346) (2,208)
Cash & Finance facility (Note 10) 4,713 5,012
Net cash (debt) 3,367 2,804
Equity (all capital and reserves) 4,935 4,893
Net (cash) debt to equity ratio (68%) (57%)
During the year the finance facility was subject to certain conditions which are disclosed in Note 10.
29. RELATED PARTIES TRANSACTIONS AND DIRECTORS’ REMUNERATION
Transactions between related parties include transactions with subsidiaries, shareholders, directors and
their companies and senior executives. Transactions with SDL’s subsidiary Solution Dynamics International
Limited are completed under a supplier agreement on similar terms to those previously struck with third
party channel partners.
Related party transactions from 1 July 2020 to 30 June 2021 were as follows:
• Key management were paid $2,108,021 (as employees of Solution Dynamics Limited or its
subsidiaries and including the calculated benefit of the employee share option plan) during the
reporting period (2020: $1,485,985) and were owed $153,744, including annual leave, at 30 June
2021 (2020: $150,918).
Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021

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The following fees and salaries were paid to Directors during the reporting period:
2021 2020
$000 $000
John McMahon (Chairman) 60 55
Nelson Siva (CEO) 541 342
Julian Beavis 40 36
Elmar Toime 64 60
Lee Eglinton 40 36
Andy Preece (Chairman Audit & Risk Management Committee) 48 41
Total Directors’ Remuneration 793 570
30. EMPLOYEE OPTIONS
On 17 February 2014 the board of Solution Dynamics Limited announced the introduction of an equity
settled employee share option plan. The general principles of the scheme were:
• The maximum aggregate number of share options to be granted pursuant to the plan is 5% of the
total number of shares on issue.
• Options of no more than 1% of the total number of SDL’s shares on issue can be granted to an
individual staff member.
• The exercise price will be determined by the Board based on the market price at the time of issue.
• The options may be exercised by the participant (in whole or part) after three years from the date
that they are granted. The key employees have 18-months from the date of eligibility and must be
employed by SDL at the date the option is exercised.
All options from the initial tranches of the scheme were exercised by March 2020. Effective 14 December
2018 the board issued 80,000 share options each to two staff who are key senior members of the
Company’s IT team (with an exercise price of $1.70), one of whom remains as an employee. The issue of a
further 360,000 share options was approved to four key members in October 2020 (with an exercise price
of $2.60), three of whom remain as employees at 30 June 2021.
2021 2020
Number of shares Number of Shares
‘000 ‘000
Unvested shares at 1 July 160 160
Granted 360 80
Lapsed (on resignation of staff member) (160) (80)
Vested - -
Unvested shares at 30 June 360 160
Percentage of total ordinary shares 2.5% 1.1%

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Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021
The net fair value of the options granted during the reporting period was $213,825 (2020: $50,445). This
cost is recognised over the vesting period.
Options Share price at Exercise Options Option
Grant Date Issued Grant Date Price Expire Value $
December 2018 80,000 $1.70 $1.70 June 2023 $25,220
March 2021 280,000 $2.60 $2.60 September 2025 $213,825
The fair value was determined using a Black-Scholes option pricing model that takes into account the
exercise price, the term of the option, the share price at grant date and expected price volatility of the
underlying share, the dividend yield and the risk-free interest rate for the term of the option.
In addition to the factors as noted in the table above further inputs for the model included:
• Standard deviation of stock returns 35%. This is based on an analysis of share price movements over
the 12-months prior to the issue of the options.
• Average dividend yield of 3.67%.
• Average annual risk-free rate of 0.83%.
32. SHAREHOLDERS AND SUBSTANTIAL SECURITY HOLDERS
32.1 The 20 largest shareholders as at 22 July 2021 were:
Shareholder % Of Total Shares
ASB Nominees Limited <574233 A/C> 10.93% 1,600,658
Philip Hadfield Hardie Boys <P & K Hardie Boys Family A/C> 7.51% 1,100,000
Public Trust - NZCSD <The Aspiring Fund> 6.63% 970,086
Indrajit Nelson Sivasubramaniam + Tracey Lee Sivasubramaniam
+ Comac Trustees Limited 6.08% 890,000
Hobson Wealth Custodian Limited <Resident Cash Account> 5.22% 763,882
Accident Compensation Corporation - NZCSD <ACCI40> 4.77% 698,234
Michael Charles Hare 4.63% 678,000
JBWERE (NZ) Nominees Limited <NZ Resident A/C> 4.16% 609,266
Colin Glenn Giffney 3.55% 520,000
Kirsten Roberts 3.07% 450,000
Stephen Christopher Montgomery 2.73% 400,000
Deirdre Elizabeth Tallott 2.56% 375,000
Jillian Bernadette Winstanley 2.22% 325,000
Roger Dixon Armstrong 2.06% 301,665
FNZ Custodians Limited <DRP NZ A/C> 1.96% 287,650
Christopher Veale + Penny Veale 1.81% 265,704
Don Nominees Limited 1.60% 234,944
Custodial Services Limited <A/C 18> 1.38% 202,075
Custodial Services Limited <A/C 4> 1.32% 193,914
Custodial Services Limited <A/C 3> 1.25% 182,756
Grand Total 75.47% 11,048,834
A total of 14,639,810 shares were on issue (2020: 14,639,810 shares).

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32.2 Size of Shareholding as at 22 July 2021
Holdings Shareholders Shares Held % Of Total
1-999 117 29,928 0.20%
1,000-4,999 106 212,033 1.45%
5,000-9,999 38 245,866 1.68%
10,000-49,999 51 860,832 5.88%
50,000-99,999 13 878,275 6.00%
100,000 and over 31 12,412,876 84.79%
Total 356 14,639,810 100.0%
32.3 Substantial Security Holders
According to notices given under the Financial Markets Conduct Act 2013, the following persons were
substantial shareholders in Solution Dynamics Limited as at 22 July 2021:
Shareholder % Of Total Shares
Meta Capital Limited (John McMahon) 10.93% 1,600,658
Philip Hadfield Hardie Boys (P & K Hardie Boys Family A/C) 7.51% 1,100,000
Public Trust - NZCSD (The Aspiring Fund) 6.63% 970,086
Indrajit Nelson Sivasubramaniam & Tracey Lee Sivasubramaniam 6.08% 890,000
33. COVID-19
SDL has continued its COVID-19 monitoring and safety policies, aimed at ensuring the Company’s staff
remained safe. This includes the use of segregated teams as required, significant levels of working from
home for non-production staff, health monitoring, and controlled facility access. These have helped
ensure no SDL staff member has been infected by COVID-19 to date. These measures will likely remain
in place until a vaccine is widely implemented in New Zealand and proven to be effective, and some,
such as working from home, are likely to become a normal part of workplace practice. The Company
deeply appreciates the efforts and cooperation by staff in their flexibility, assistance and compliance with
health requirements, and thanks them for perseverance and maintaining morale in difficult operating
circumstances.
It is difficult to accurately assess the financial impact of COVID-19 on SDL’s FY2021 financial result.
The largest effects were on volumes in the UK where SDL’s customers had significantly lower activity
for the financial year (in some cases down around 80%). Additionally, a large customer with international
activities that has sizeable activity in developing markets, was forced to scale back operations in many
countries, reducing processing volumes. Less easily measurable was the lack of direct sales activity, in the
US particularly. The Company’s best estimate is that COVID reduced revenues by – very approximately –
around 10-12%.
Some modest costs savings continued, with travel remaining near zero. However, COVID appears to be a
factor in the shortage of skills across the technology sector, adding cost pressures that are continuing in
FY2022.

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Notes to the Consolidated Financial Statements CONTINUED
For the year ended 30 June 2021
34. EVENTS AFTER THE REPORTING DATE
On 26 August 2021, the directors approved the payment of a fully imputed dividend of 4.00 cents per
share amounting to $586,000 to be paid on 1 October 2021 (2020: The directors approved the payment
of a fully imputed dividend of 6.00 cents per share, amounting to $878,000).

Statement of
Corporate Governance
STATEMENT OF CORPORATE GOVERNANCE
The corporate governance processes set out in this statement do not materially differ from the principles set out
in the New Zealand Stock Exchange Corporate Governance Code (re-dated as at January 2020). The information in
this report is current as at 26 August 2021 and has been approved by the Board.
The Board Charter and key policies which were approved by the board on 2 May 2019 are available on the
Company’s website: www.solutiondynamics.com.
SDL is listed on the NZX’s Main Board and is subject to regulatory control and monitoring by both the NZX and the
Financial Markets Authority (FMA). The Board Charter and key policies are available on the Company’s website:
www.solutiondynamics.com.
PRINCIPLE 1 – CODE OF ETHICAL BEHAVIOUR
Directors should set high standards of ethical behaviour, model this behaviour and hold management to account for
adherence to these standards throughout the organisation.
The Board recognises that high ethical standards and behaviours are central to good corporate governance and it is
committed to the observance of a Code of Business Conduct and Ethics throughout the Group.
The Code of Business Conduct and Ethics, which was approved by the Board as part of the process of migrating
to the NZX Main Board, provides a framework of standards by which the directors, employees and contractors to
SDL and its related companies are expected to conduct themselves. It is intended to facilitate actions and decision-
making that is consistent with SDL’s values, business goals and legal obligations and, thereby, enhance performance
outcomes.
Employees are expected to report any breaches of the Code in line with the processes outlined in the Code of
Business Conduct and Ethics.
A copy of the Code of Business Conduct and Ethics was made is made available to all employees and is given to
all new employees when they join the Group. Any future changes to the Code of Business Conduct and Ethics
will be communicated to staff. The Code of Business Conduct and Ethics can also be found at http://www.
solutiondynamics.com/wp-content/uploads/2019/05/Code_of_Business_Conduct_and_Ethics.pdf.
SDL has a Share Trading Policy to mitigate the risk of insider trading in SDL’s securities by employees and Directors.
A copy of this Policy can also be found at http://www.solutiondynamics.com/wp-content/uploads/2019/05/Share_
Trading_Policy.pdf. The Policy was updated in May 2019 as a part of the process of migrating to the NZX Main
Board. Additional share trading restrictions apply to Restricted Persons including Directors and certain employees.
Directors’ Share Dealings and Shareholding
Directors disclose the following relevant interests in shares in the Group at 30 June 2021 and transactions in
relevant interests in shares during the financial year ended 30 June 2021.
Shareholder Balance Additions Disposals Balance
30 June 2020 30 June 2021
John McMahon 1,600,658 - - 1,600,658
Nelson Siva 890,000 - - 890,000
Andy Preece 53,000 - - 53,000
Lee Eglinton 18,000 - - 18,000

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Entries in the Interests Register
In addition to the interests and related party transactions disclosures in Note 29 of the Notes to the Financial
Statements and the Director remuneration disclosed under Principle 5 of the NZX Corporate Governance Code, the
following interests were disclosed to the Board and noted in the interests register during the financial year ended
30 June 2021:
• Indemnification of Officers and Directors: The Company indemnifies Directors and Executive Officers of the
Group against all liabilities which arise out of the performance of their normal duties as Director or Executive
Officer.
• Directors’ & Officers’ insurance: In parallel with the indemnity coverage, the Group has Directors & Officers’
liability insurance. The total cost of this insurance expensed during the year ended 30 June 2021 was $54,242
(2020 - $21,250).
Conflicts of Interest and Related Parties
All Directors must disclose any general and specific interests that could be in conflict with their obligations to the
Group. Transactions with related parties and balances outstanding relating to the year ended 30 June 2021 are
disclosed in Note 29 of the Notes to the Financial Statements.
PRINCIPLE 2–BOARD COMPOSITION & PERFORMANCE
To ensure an effective Board, there should be a balance of independence, skills, knowledge, experience and perspectives.
The primary responsibilities of the Board include:
• to establish the vision of the Group
• to establish the long-term goals and strategies of the Group
• to approve annual and half-year financial reports
• to approve annual budgets
• to approve corporate policies
• to ensure the Group has good internal controls and keeps adequate records
• to ensure legislative compliance
• to monitor executive management
• to ensure appropriate communication to stakeholders
Board procedures are governed by the Constitution.
The Board is responsible for setting the strategic direction of the Company, overseeing the financial and
operational controls of the business, putting in place appropriate risk management strategies and policies and
enhancing its value for shareholders in accordance with good corporate governance principles.
In addition to the Code of Business Conduct and Ethics, the Board also operates under a written Board Charter
which sets out the structure of the Board, role and responsibilities of Directors, procedures for the nomination,
resignation and removal of Directors; and identifies procedures to ensure that the Board meets regularly, conducts
its meetings in an efficient and effective manner and that each Director is fully empowered to perform his or her
duties as a Director of the Company and to fully participate in Board meetings.
Statement of Corporate Governance CONTINUED

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The day-to-day management of SDL’s business is undertaken by SDL’s senior management team under the
leadership of the Chief Executive Officer, through a set of delegated authorities which are reviewed annually.
In order to discharge their duties, Directors have direct access to and may rely on financial and other management
information, and advice provided by SDL’s senior management as well as professional advice provided by external
advisers. Directors have the right, with the approval of the Chairman or by resolution of the Board, to seek
independent legal or financial advice at the Company’s expense for the proper performance of their duties.
Board Composition and Appointment
The number of elected Directors and the procedure for their retirement and re-election at Annual Shareholder
Meetings is set out in the Company’s constitution.
SDL considers that the nomination process for new Director appointments is the responsibility of the whole Board
and it does not have a separate Nomination Committee.
The Board takes into consideration tenure, capability, diversity and skills when reviewing Board composition and
new appointments.
At each Annual Meeting, one-third of the current Directors retire by rotation and are eligible for re-election. Any
Directors appointed since the previous Annual Meeting must also retire and are eligible for election.
When a new Director is appointed, SDL will enter into a written appointment letter setting out the terms of their
appointment.
The Board supports the separation of the roles of Chairman and CEO. The Chair of SDL as at 26 August 2021 is
non-executive director, John McMahon, who has (through a related party) a 10.93% shareholding in SDL and is
therefore not considered independent under the NZX Main Board Listing Rules.
The Board currently comprises six Directors, being a non-executive chairman (non-independent), four non-
executive Directors (independent) and the Chief Executive. They are all elected on the basis of the value they bring
to the Board.
In order for a Director to be independent, the Board has determined that he or she must not be an executive of
SDL and must have no ‘Disqualifying Relationships’. In this regard, the Board follows the requirements of the NZX
Listing Rules (and NZX guidance on the application of those requirements). Information on each director can be
found at http://www.solutiondynamics.com/our-team/. Directors’ interests are disclosed on Note 29 of the Notes
to the Financial Statements.
The Company encourages all Directors to undertake appropriate training and education so that they may best
perform their duties. This includes attending presentations on changes in governance, legal and regulatory
frameworks; attending technical and professional development courses. ln addition, Directors can receive updates
on relevant industry and Company issues, and briefings from key executives.
The Board aims to regularly consider individual and collective performance, together with the skillsets, training and
development and succession planning required to govern the Group’s business.
Diversity
SDL is committed to a culture that actively supports diversity and inclusiveness and prevents or eliminates
discrimination in any form. As such, SDL firmly believes that diversity and inclusiveness enables SDL to better
respond to the ever-changing environment in which we operate and better serve the diverse customer and
stakeholder base to which we are accountable to.

The concept of diversity includes (but is not limited to) concepts of gender, race, ethnicity and cultural background
as well as physical capability, age, sexual orientation, and religious or political beliefs.
SDL does not have formal diversity policy. Instead, SDL’s Code of Business Conduct and Ethics notes that SDL
values diversity and inclusion and has a workforce consisting of many individuals with diverse skills, values,
backgrounds, ethnicity and experience. We attract and retain a diverse workforce and this diversity brings a range
of ideals, skills and innovation to SDL, which assists in achieving our objectives.
As at 30 June 2021, the gender balance of SDL’s directors and people was as follows:
30 June 2021 30 June 2020
Directors
Females 1 1
Males 5 5
Management Team
Females 1 -
Males 6 7
All Employees
Females 38 34
Males 60 50
The Management team is defined as being the Chief Executive Officer and senior leaders with reporting lines direct
to the Chief Executive Officer.
Board Meetings and Attendance
The Board has 11 scheduled meetings a year.
During the period 1 July 2020 to 30 June 2021 attendance at Board and Committee meetings was:
Board Meetings
(1)
Audit & Risk
Management
(2)
Held Attended Held Attended
John McMahon (Chairman) 11 11 2 1
Julian Beavis 11 11 n/a n/a
Nelson Siva (CEO) 11 11 n/a n/a
Elmar Toime 11 11 n/a n/a
Andy Preece 11 9 2 2
Lee Eglinton 11 11 2 1
(1) John McMahon is the board chairman
(2) Andy Preece is the chairman of the audit & risk management committee
Statement of Corporate Governance CONTINUED
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PRINCIPLE 3 - COMMITTEES
The Board should use committees where this will enhance its effectiveness ln key areas, while still retaining Board
responsibility.
The Board has constituted one standing Committee being the Audit and Risk Committee. Due to the size of the
Board, matters normally dealt with by remuneration and the nominations committees are dealt with by the full
Board.
Committees allow issues requiring detailed consideration to be dealt with separately by members of the Board with
specialist knowledge and experience, thereby enhancing the efficiency and effectiveness of the Board. However,
the Board retains ultimate responsibility for the functions of its Committees and determines their responsibilities.
The Audit and Risk Committee meets as required and has terms of reference (a Charter). A copy of the Audit and
Risk Committee Charter can be found at: http://www.solutiondynamics.com/wp-content/uploads/2020/05/
Audit_Risk_Charter.pdf
Minutes of each Committee meeting are forwarded to all members of the Board. The Audit and Risk Committee is
empowered to seek any information it requires from employees in pursuing its duties and to obtain independent
legal or other professional advice.
The membership and performance of the Committee is reviewed annually.
From time to time, special purpose committees may be formed to review and monitor specific projects with senior
management.
As the Board believes that matters of remuneration and nominations are the responsibility of the entire Board, SDL
does not consider it necessary to comply with recommendations 3.3 and 3.11 of the NZX Corporate Governance
Code and accordingly does not have a separate remuneration committee or nomination committee.
The Board will continue to monitor best practice in the governance area and update SDL’s policies to ensure it
maintains the most appropriate standards.
Audit and Risk Committee
The role of the Audit and Risk Committee is to assist the Board in carrying out its responsibilities under the
Companies Act 1993 and the Financial Reporting Act 2013 regarding accountancy practices, policies and controls
relative to the Company’s financial position and make appropriate enquiry into the audits of the Company’s
financial statements. This responsibility includes providing the Board with additional assurance about the quality
and reliability of the financial information issued publicly by the Company. All matters required to be addressed and
for which the Committee has responsibility were addressed during the 2021 financial year.
As noted above, a written charter outlines the Audit and Risk Committee’s delegated authority, duties,
responsibilities and relationship with the Board.
The Committee must be comprised solely of Directors of SDL, have a minimum of three members, have a majority
of independent Directors and have at least one director with an accounting or financial background. The makeup of
the current members of the Committee complies with this recommendation. The chair of the Committee cannot be
Chair of the Board.
Members as at 30 June 2021 were Andy Preece (Chairman), Lee Eglinton and John McMahon. It met twice during
the financial year.
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Management and employees may only attend meetings at the invitation of the Committee and the Committee
routinely has Committee only time with the external auditors without management present.
Takeovers
The Board has yet to establish protocols or procedures to be followed in the event of a takeover. Nonetheless, the
Board understands that any such protocols or procedures would involve SDL forming an independent takeover
committee to oversee disclosure and response and engage expert legal and financial advisors to provide advice on
procedural matters affecting any such takeover.
PRINCIPLE 4 –REPORTING & DISCLOSURE
The Board should demand integrity in financial and non-financial reporting, and in the timeliness and balance of
corporate disclosures.
The Board is committed to keeping shareholders and the market informed of all material information about the
Company and its performance and ensuring compliance with legislative requirements and those of the NZX Listing
Rules.
The release of material information is guided by the NZX Listing Rules (and the guidance provided by NZX).
In addition to all information required by law, SDL also seeks to provide sufficient meaningful information to ensure
stakeholders and investors are well informed, including financial and non-financial information.
Financial Statements
It is the Directors’ responsibility to ensure preparation of financial statements that give a true and fair view of the
financial position of the Group as at the end of the financial year and the results of operations and cash flows for
the year. The external auditors are responsible for expressing an independent opinion on the financial statements.
The consolidated financial statements set out in this report have been prepared by management in accordance with
generally accepted accounting practice in New Zealand. They are based on appropriate accounting policies which
have been consistently applied and which are supported by reasonable judgements and estimates.
For the financial year ended 30 June 2021, the directors believe that proper accounting records have been kept
which enable, with reasonable accuracy, the determination of the financial position of SDL and the Group and
facilitate compliance of the financial statements with the Companies Act 1993 and the Financial Reporting Act
2013.
After reviewing internal management financial reports and budgets the Directors believe that the Group will
continue to be a going concern in the foreseeable future. For this reason, they continue to adopt the going concern
basis in preparing the financial statements.
The Chief Executive and Chief Financial Officer have confirmed in writing to the Board that SDL’s external financial
reports present a true and fair view in all material aspects.
SDL’s full and half year financial statements are available on the Company/s website at: http://www.
solutiondynamics.com/investor-centre/
Non-financial information
Statement of Corporate Governance CONTINUED

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The Board recognises the importance of non-financial disclosure. Given SDL’s size the Board has elected not
to comply with recommendation 4.3 of the NZX Corporate Governance Code and has not adopted a formal
environmental, social and governance (ESG) framework.
SDL discusses its strategic objectives and its progress against these in the Management Discussion and Analysis
section of this annual report and at the Annual Meeting.
SDL is committed to using its resources responsibly and is actively working with its supply chain partners to look
for opportunities to reduce any negative environmental risk or impact from its business operations, products and
services.
The Board encourages diversity and will not knowingly allow SDL to participate in business activities where SDL
could be complicit in human rights and labour standard abuses.
PRINCIPLE 5 –REMUNERATION
The remuneration of Directors and management should be transparent, fair and reasonable.
The Board promotes the alignment of the interests of the directors, the Chief Executive Officer and management
with the long-term interests of shareholders. Remuneration policies and structure are reviewed regularly to ensure
remuneration of management and directors is fair and reasonable in a competitive market for the skills, knowledge
and experience required by the Company.
The Board recognises that it is desirable that management (including that for any executive Director) remuneration
should include an element dependent upon the performance of both the Group and the individual, and should be
clearly differentiated from non-executive Director remuneration.
Details of Directors and management remuneration and entitlements for the 2021 financial year are set out in Note
29 of the Notes to the Financial Statements.
SDL does not have a Remuneration Committee and matters relating to remuneration are dealt with by the full
Board.
Directors’ Remuneration
The total remuneration pool available for Directors is fixed by shareholders. The Board determines the level of
remuneration paid to Directors from the approved collective pool. Directors also receive reimbursement for
reasonable travelling, accommodation and other expenses incurred in the course of performing their duties.
Directors are paid on a per director rate as follows,
Position Approved Remuneration
Chairman $60,000
Non-executive Director $40,000
Audit & Risk Committee Chair $7,500
Hourly rates for abnormal/particularly time intensive projects or
transactions outside the scope of typical board work $250 /hour
Directors’ remuneration during the year is disclosed in Note 29 of the Notes to the Financial Statements.

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Executives’ Remuneration
Executive remuneration consists of a fixed base salary, incentives and a Share Option Plan. Incentives are paid
against targets agreed with members of the management team at the commencement of the financial year and are
based on earnings and sales targets.
Executives’ remuneration greater than $100,000 per annum received in their capacity as employees during the year
is disclosed in Note 29 of the Notes to the Consolidated Financial Statements.
Details of the SDL Share Option Plan are detailed in Note 30 of the Notes to the Financial Statements.
Chief Executive Officer Remuneration
The review and approval of the Chief Executive Officer’s remuneration is the responsibility of the Board.
The Chief Executive Officer’s remuneration comprises a fixed base salary and bonus paid annually.
The CEO’s remuneration can be summarised as follows:
Description (000’s)
Base salary 270
Incentive based on earnings performance (1) 202
Total on target earnings 472
(1) This is paid annually in arrears based on Company earnings
PRINCIPLE 6 –RISK MANAGEMENT
Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The
Board should regularly verify that the issuer has appropriate processes that identify and manage potential and material
risks.
SDL is committed to proactively managing risk. Whilst risk management, and the Group’s system of internal
controls, is the responsibility of the entire Board, the Audit and Risk Committee assists the Board and provides
additional oversight with regard to the risk management framework and monitoring compliance with that
framework.
The Board monitors the operational and financial aspects of the Group and considers recommendations from
external auditors and advisors on the risks that the Group faces.
The Board ensures that recommendations made are assessed and appropriate action is taken where necessary to
ensure risks are managed appropriately.
The Board’s approach to risk management is incorporated into the Audit and Risk Committee Charter, which can be
found on the Company’s website.
The Board delegates day-to-day management of the risk to the Chief Executive Officer. SDL’s management team
is required to regularly identify the major risks affecting SDL’s business and develop structures, practices and
processes to manage and monitor these risks.
It is the responsibility of the Directors to ensure adequate accounting records are kept. Directors are also
responsible for the Group’s system of internal financial controls.
Internal financial controls have been implemented to minimize the possibility of material misstatement. They can
provide only reasonable assurance and not absolute assurance against material misstatements or loss.
No major breakdowns of internal controls were identified during the year.
Statement of Corporate Governance CONTINUED

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The Board is satisfied that SDL has in place a risk management process to effectively identify, manage and monitor
SDL’s principal risks.
SDL also maintains insurance policies that it considers adequate to meet its insurable risks.
Key financial and non-financial risks are included in Note 28 of the Notes to the Financial Statements.
Health and Safety
The Board recognises that effective management of health and safety is essential for the operation of a successful
business, and its intent is to prevent harm and promote wellbeing for SDL’s employees and contractors. The Board
is responsible for ensuring that the systems used to identify and manage health and safety risks are fit for purpose,
being effectively implemented, regularly reviewed and continuously improved.
SDL has a Health and Safety Charter which is monitored by the management team. Health and Safety reports,
including incident reports, for SDL’s business are included in the compliance section of the Board papers.
PRINCIPLE 7 –AUDITORS
The Board should ensure the quality and independence of the external audit process.
The Board’s approach to the appointment and oversight of the external auditor are outlined in SDL’s Audit and Risk
Committee Charter, which can be found at: http://www.solutiondynamics.com/wp-content/uploads/2020/05/
Audit_Risk_Charter.pdf. Amongst other things, the Charter is designed to ensure that audit independence is
maintained, both in fact and appearance, so that SDL’s external financial reporting is viewed as being highly reliable
and credible.
The Audit and Risk Committee provides additional oversight of the external auditor reviews the quality and cost
of the audit undertaken by SDL’s external auditors and provides a formal channel of communication between the
Board, the management team and the external auditors. The Committee also assesses the auditor’s independence
on an annual basis. These requirements are detailed in the Audit and Risk Committee Charter.
For the financial year ended 30 June 2021, Grant Thornton continued in their appointment as the external auditor
for SDL. Grant Thornton has occupied that role since 2009. The audit partner has been rotated in 2021 (the prior
rotation was in 2016).
All audit work at SDL is fully separated from any non-audit services, to ensure that appropriate independence is
maintained. The amount of fees paid to Grant Thornton for audit and other services is identified in Note 6 of the
Notes to the Financial Statements.
Grant Thornton has provided the Board with written confirmation that, in their view, they were able to operate
independently during the financial year.
Grant Thornton attends the Annual Meeting, and the lead audit partner is available to answer questions from
shareholders at that meeting. In this capacity, Grant Thornton attended the 2020 annual meeting.
SDL has a number of internal controls overseen by Audit and Risk Committee, including controls for computerised
information system, security, business continuity management, insurance, health and safety, conflicts of interest,
and prevention and identification of fraud. SDL does not have a dedicated Group internal auditor role.

| 61 |

PRINCIPLE 8 – SHAREHOLDER RIGHTS & RELATIONS
The Board should respect the rights of shareholders and foster constructive relationships with shareholders that
encourage them to engage with the issuer.
The Board is committed to open dialogue and to facilitating engagement with shareholders.
SDL has a calendar of communications for shareholders, including but not limited to:
• Annual and Half-Yearly Reports
• Market announcements
• Annual Meeting
• Access to information through the SDL website www.solutiondynamics.com
The Company maintains a comprehensive website which provides access to key corporate governance documents,
copies of all major announcements and Company reports.
Shareholders are encouraged to attend the Annual Meeting and may raise matters for discussion at the meeting. In
accordance with NZX Corporate Governance Code, the Board ensured that the notice of the Annual Meeting was
posted to SDL’s website as soon as possible and at least 28 days prior to the meeting.
Shareholders have the ultimate control in corporate governance by voting Directors on or off the Board. Voting is
by poll, upholding the ‘one share, one vote’ philosophy.
In accordance with the Companies Act 1993, SDL’s constitution and the NZX Listing Rules, SDL refers major
decisions which may change the nature of SDL’s business to shareholders for approval.
All shareholders are given the option to elect to receive electronic communications from SDL. In addition to
shareholders, SDL has a wide range of stakeholders and maintains open channels of communication for all
audiences, including shareholders, brokers and the investment community, as well as our staff, suppliers and
customers.
| 62 |
Statement of Corporate Governance CONTINUED

| 63 |
Nature of Business
Data management, electronic digital printing,
document distribution, web presentment and
archiving, fulfilment, print services, scanning,
data entry and document management.
Directors
John McMahon – Non-independent Chairman
Elmar Toime -Independent
Julian Beavis - Independent
Andy Preece - Independent
Lee Eglinton - Independent
Indrajit Nelson Sivasubramaniam (Nelson Siva) –
Chief Executive Officer
Auditors
Grant Thornton New Zealand Audit Limited
Grant Thornton House
152 Fanshawe Street
AUCKLAND
Bankers
ANZ National Bank Limited
Level 20, ANZ Centre
23 - 29 Albert Street
AUCKLAND
Legal Representative
Stephen Layburn
Commercial Barrister
Level 3, 175 Queen Street
AUCKLAND
Share Registry
Computershare Investor Services
Level 2, 159 Hurstmere Rd
Takapuna
AUCKLAND
Private Bag 92119
Auckland Mail Centre
AUCKLAND 1142
Registered Office and address for service
18 Canaveral Drive
Albany
AUCKLAND
PO Box 301248
Albany
AUCKLAND 0752
Tel: +64 (9) 970-7700
Solution Dynamics (International) Limited
Lancaster Court, 8 Barnes Wallis Road,
Fareham, PO15 5TU
Hampshire
UNITED KINGDOM
Tel: +44 1489 668219
Solution Dynamics Incorporated
260 Madison Avenue, 8th floor
New York, New York 10016
UNITED STATES of AMERICA
Tel: +1 (917) 319 5625
Déjar International Limited
18 Canaveral Drive
Albany
AUCKLAND
PO Box 301248
Albany
AUCKLAND 0752
Tel: +64 (9) 970-7700
Company Directory

Head Office:
18 - 24 Canaveral Drive, Rosedale, Auckland 0632, New Zealand
Phone +64 9 970 7700 | PO Box 301248, Albany 0752, New Zealand
info@solutiondynamics.com | www.solutiondynamics.com
New Zealand  United Kingdom  United States of America

---

| 1 |
Management Discussion
and Analysis 2021
Management Discussion
and Analysis
FY2021 Result Overview
Solution Dynamics Limited (“SDL” or “Company”) recorded a net profit after tax of $2.03 million for FY2021, a 9.0%
gain on $1.87 million in the prior FY2020 year. As noted in the FY2020 Annual Report, the prior year profit included
a net after tax gain of $0.23 million that is one-off in nature, so the normalised prior period profit for comparative
purposes is $1.63 million, meaning the FY2021 gain in earnings on this adjusted basis is 24.5%. The trend of growth
in international business from SDL’s Software & Technology platforms continues although FY2021 revenue growth
was limited to 11.9% almost solely the result of COVID-19. COVID caused a full year slump in UK revenues in
particular, with volumes in developing markets also constrained. This revenue pressure, combined with onboarding of
larger new customers, required additional IT development and support resources which saw Cost of Goods Sold rise
by 6.7% and Selling, General & Administration (“SG&A”) expenses increase again, although the FY2021 SG&A rise
was a more modest 1.9% versus the substantial rise of 47.5% the prior year.
Cash flow from operations was $2.61 million (FY2020 $5.77 million) and the net cash position at year end was $4.71
million (FY2020 $5.01 million). Part of the year-end cash position represents prepayment of postage by some clients
(around $1.2 million).
The directors have declared a final dividend of 4.0 cents per share (FY2020 6.0 cents) fully imputed, bringing total
dividends for FY2021 of 11.0 cents per share (FY2020 9.0 cents).
Effects of COVID-19
SDL has continued its COVID-19 monitoring and safety policies, aimed at ensuring the Company’s staff remained
safe. This includes the use of segregated teams as required, significant levels of working from home for non-
production staff, health monitoring, and controlled facility access. These have helped ensure no SDL staff member
has been infected by COVID-19 to date. These measures will likely remain in place until a vaccine is widely
implemented in New Zealand and proven to be effective, and some such as working from home are likely to become
a normal part of workplace practice. The Company deeply appreciates the efforts and cooperation by staff in their
flexibility, assistance and compliance with health requirements, and thanks them for perseverance and maintaining
morale in difficult operating circumstances.
It is difficult to accurately assess the financial impact of COVID-19 on SLD’s FY2021 financial result. The largest
effects were on volumes in the UK where SDL’s customers had significantly lower activity for the financial year (in
some cases down around 80%). Additionally, a large customer with international activities that has sizeable activity in
developing markets, was forced to scale back operations in many countries, reducing processing volumes. Less easily
measurable was the lack of direct sales activity in the US particularly. The Company’s best estimate is that COVID
reduced revenues by – very approximately – around 10-12%.
Some modest costs savings continued, with travel remaining near zero. However, COVID appears to be a factor in the
shortage of skills across the technology sector, adding cost pressures that are continuing in FY2022.
As noted in last year’s Annual Report, an SDL director, Mr Elmar Toime, has significant experience in the global
mail and logistics markets (former CEO of NZ Post, former Deputy Executive Chair of the Royal Mail Group, was
a Supervisory Board member of Deutsche Post DHL, and is a non-executive director of Qatar Post). He provided
specialised mail and logistics consulting advice to the Company during the COVID-19 period along with additional
support to SDL’s northern hemisphere operations during a period when travel from New Zealand has not been
26 August 2021

| 2 |
possible, along with the temporary absence of the CEO, Nelson Siva, for medical reasons. These services were
partly provided in FY2020 and continued for the early part of FY2021 but then ceased; they were provided on
normal commercial terms (refer Note 29).
Business Description
SDL operates in the Customer Communications market (essential mail, interactive marketing communications
and on-demand communications) across both the old economy print/mail house business and the new economy
document management business. The Company’s products and services are represented by two revenue streams:
• Services (split into Digital Print & Document Handling, and Outsourced Services); and
• Software & Technology.
Services operates solely in New Zealand. Digital Print & Document Handling revenues are generated from digital
printing and mail house processing for two categories of mail items: transactional mail, such as invoices and
statements; and direct marketing mail such as promotional material. These are then distributed through New
Zealand Post’s (“NZ Post”) mail delivery system. A number of the components included in this service, such as
envelopes and postage, form part of Outsourced Services revenues (which are typically very low margin activities).
Digital printing differs from traditional printing in that each document printed is typically personalised and unique.
Revenue from the Company’s scanning operation is included in Services (for New Zealand scanning operations),
while offshore consulting and software revenues that are related to SDL’s software technology are included in the
Software & Technology revenue stream.
Software & Technology develops and markets SDL’s own software products which include:
• digital asset management, with communication templates and campaign management;
• document archival;
• document composition;
• desktop mail solutions for “print on demand”;
• consulting and software revenue from scanning and scanning workflow; and,
• international cross-border print-on-demand management software.
Note that SDL has several different business models for international clients. For some, SDL only provides software
or related consulting services, but for others it also arranges third party printing and logistics on which it will
typically earn a modest margin. For these latter clients, the software charge and print/logistics margins are typically
aggregated into an overall charge to the customer. This means Software & Technology revenues are a mix of pure
software and software consulting revenues for some clients, while others also include third party printing and
logistics revenues that are generated from SDL’s software.
Transactional mail volumes in New Zealand and internationally are continuing to decline, although anecdotal
evidence suggests direct marketing mail is seeing less erosion. Some types of communications still remain better
suited to print and the usage level of printed versus electronic communications varies significantly across countries.
Technology such as DéjarMail (SDL’s print-on-demand desktop mail solution) can improve the handling efficiency,
management and cost of physical mail. The Company’s integrated range of print and software technologies means
it is able to offer a holistic and distribution channel/platform-agnostic approach to managing its customers’
communications needs.
The Company is headquartered in New Zealand with international operations in the UK, France and USA.

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International Expansion
Historically, SDL was predominantly a New Zealand digital print and mail house business with some international
software revenue. That position changed in FY2020, when SDL’s international revenue surpassed its New Zealand
revenue for the first time. Total Software & Technology revenue (some of which is revenue billed in New Zealand) as
a proportion of total revenue was around 70%.
The requirement to provide high levels of international customer service for software delivery and support
capability means SDL’s New Zealand technology staff are regularly called upon to provide after-hours support to
overseas customers and the Company’s international staff. Most of the Company’s software development team
are based in New Zealand (two are in the UK and one in the USA). SDL recognises the stress that international
expansion and time zone differences have placed on staff, both in New Zealand and globally, and has actively
increased the number of support, implementation and DevOps staff in the northern hemisphere.
Description and Review of Revenue Streams
SDL Services
SDL Services predominantly provides mail house operations to high-volume postal mail users in the business-to-
consumer sector. DéjarMail has expanded the market for SDL’s print and post service down to the SME (small
to medium enterprise) sector although the Company sells to this market through channel partners. SDL Services
operates leased, high-speed digital colour and monochrome printers. In addition to digital printing, Services also
provides the ancillary document handling operations such as automated envelope inserting and flow-wrap.
Services revenue also includes Outsourced Services, which encompasses a variety of outsourced functions or
components such as postage, third party offset printing, freight, paper and envelopes. The Company has an access
agreement with NZ Post which provides wholesale rates and bulk mail discounts off NZ Post’s retail rates, subject
to SDL meeting minimum volumes requirements. The profit margins on many of these outsourced components,
especially postage, are slim.
General mail volumes continue to decline albeit at what SDL estimates is a lower rate than the overall market fall;
SDL’s FY2021 mail lodgement volumes declining 8.8%, versus 15.8% the prior year. The Company’s digital print
volumes also fell slightly, declining 3.7%. SDL believes consolidation of mail house capacity is inevitable and is
confident it holds a strong competitive position in the market.
On the digital communications side, SDL’s volume of customer emails rose 7.6%.
Outsourced Services revenue in the following table is a combination of both very low margin postage and the
outsourced printing in the New Zealand operations.
SDL Services Revenue Breakdown FY2021 FY2020 Percentage
(all figures $000) Change
Digital Printing and Document Handling 4,161 4,568 -8.9%
Outsourced Services 6,649 7,450 -10.8%
Total Services Revenue 10,810 12,018 -10.1%
During the year, SDL renewed the lease contract on its print equipment and the Company believes it now has
highly competitive rates for its continuous digital printing equipment. Additionally, one of SDL’s major New Zealand
customers re-tendered its business during FY2021 and the Company re-secured the business for a further three
plus two year term. SDL has also gained business from a medium-sized regional authority that will contribute in
FY2022.

| 4 |
SDL Software & Technology
Two trends continue to drive demand for SDL’s software. First is the digital transformation of communication
channels with the increasing ability for businesses to personalise their customer engagement. Secondly, cost and
efficiency pressures are causing businesses to optimise their communications channels, both digital and print. SDL’s
software platforms provide functionality to deliver on both these trends that may have been accelerated by COVID.
The digital transformation aspect has significant market competition in the purely digital sector, with technology
companies look to help businesses employ more “pull” marketing tactics, drawing people into their brands
with interesting, informative, and engaging content. Communication channels are no longer “one size fits all”;
customers now receive increasingly personalised messaging through multi-media channels. SDL treats each form of
communication – whether a customer email, an invoice or account statement, or a piece of marketing collateral – as
a means to enrich and deepen the personalised relationships that our customers have with their customers.
The second aspect – helping optimise both print and digital communications channels – is one where SDL appears
to have a greater degree of competitive advantage. The Company’s history in mail house, digital printing and
fulfilment means it understands the importance of, and requirements for, data accuracy, timely delivery and cost
efficiency. This is not simply a case of generating, printing and mailing a PDF. There are significant complexities
around personalised document creation and production for specialised, high volume print equipment, coupled with
personalised mail inserts, multi-part and multi-lingual documents, global routing for optimised multi-region printing,
and handling and management of mail returns, along with industry knowledge around optimising mail and logistics
costs. In addition, there are increasing data security and privacy regulations, including data integrity and document
management requirements. Delivering solutions in this domain requires a combination of digital document skills
and specialised global print and mail industry knowledge. SDL’s in-house production experience and how the
Company has coupled this with its in-house development (and in some cases acquisition) of software technology
has produced what it believes is effective technology with few global competitors.
SDL Software has six software engines or platforms that can be linked together in bespoke combinations to
develop customer-specific solutions:
1. Déjar
Déjar is a digital archival system that provides the ability to efficiently store and retrieve electronic documents
created from most formatting tools. Déjar allows users to exactly reproduce the original document and access
these via a browser over the local network or via the Internet. The reproduced document can be printed, faxed or
emailed and Déjar’s security and history features ensure every document created and subsequent access event is
recorded by User ID and date/time stamp.
2. Composer
Composer is SDL’s electronic document creation software. It is flexible and allows customised documents to
be built on the fly, based on information retrieved from databases. Based on templates it automatically creates
templates, documents and letters with dynamic, customised content, formatted to each customer’s requirements.
Composer allows companies to easily standardise corporate documentation formats for all users, including regional
and legal variations. Templates, documents, emails, letters and newsletters created by Composer are automated,
ready to archive, print, publish online, or electronically distribute to customers in one step.
3. Bremy
Bremy is an integrated, multi-channel publishing and distribution solution for businesses across a broad spectrum
of industries. It manages the workflow of digital assets, from document creation and revision, to final email or print-
ready files and distribution through multiple channels, including print, email, web, digital signage and mobile. It

| 5 |
helps streamline and provides integrity to document proofing and integrates with data sources to produce complex
documents such as online or physical catalogues. It also has a Campaign Manager module to assist companies in
creating and managing specific advertising programmes.
4. DéjarMail (POD: Post on Demand)
DéjarMail is a desktop mail management solution which allows customers to route mail correspondence, by file
transfer or web browser portal (Post On Demand), to SDL or any other service provider for printing and delivery via
post or any other medium. This delivers costs savings for smaller businesses and for larger companies’ ad hoc mail.
5. Jupiter
Jupiter is a global print and mail solution that benefits Postal Administrators, senders and recipients, all via
a “Managed Print and Mail Solution”. Jupiter provides a technology platform which links together customer
communication origin points such as ERP, transactional and marketing output with production and fulfilment on a
globally distributed basis. Closely integrated with over 300 service providers globally, customers can use a highly
flexible web service API to achieve simultaneous concurrent fulfilment across five continents, all while retaining
visibility and control of the process via an intuitive and mobile friendly, web portal.
The scope for integration of the SDL product set, particularly DéjarMail Post on Demand, with Jupiter’s global
fulfilment network opens the door to expansion of the markets that SDL’s solutions can apply to.
6. Scantech scanning software
Scantech’s suite of software solutions include scanning applications to digitise physical documents, automated
extraction of data from documents (both physical and digital) including workflows for the processing of this data
and the automation of business processes such as accounts payable and accounts receivable. These are also
integrated into SDL products, such as Déjar for archival and retrieval.
Software & Technology has four broad revenue sources.
The first is as a SaaS (Software as a Service), where customers operate SDL’s software on a pay-as-you-go model.
This is normally by way of a per-document or per-electronic transaction charge and in many cases with a base
monthly fee. SDL will usually host the software on third party hosting infrastructure (such as Amazon Web Services
or Microsoft Azure) and may also archive related data on behalf of the client.
Secondly, the company offers bespoke software development where this is related to a customer using SDL’s
software. An example is a customer requiring a front end, web-based access portal to allow its clients to access
the underlying data being stored or managed by SDL’s software. In general, SDL prefers to provide generic
functionality that covers most customer use situations rather than building overly customer-bespoke infrastructure,
as this allows better ongoing management of SDL’s software base by mitigating excess complexity and the risk of
“technical debt”.
The third is the provision of programming, consulting, end-customer onboarding, business analysis and design
services that help clients to manage essential and marketing communications both physical and electronic.
The fourth is a total communications solution. This includes SDL providing print and mail/logistics through third
party partners that may not be in the same country as the customer. In this economic model, SDL does not usually
disaggregate software and services, but prices an integrated communications solution for the customer.
Software encompasses all international and New Zealand software revenue. It includes Déjar revenue in New
Zealand for digital document archival and management for SDL Services’ customers.

| 6 |
SDL continues to invest in its software IP and current efforts are mainly focussed on functional development and
tighter integration amongst product platform engines. A number of the Company’s software products have been
developed in-house (e.g. DéjarMail Post-on-Demand) while others such as the Jupiter global distributed print
platform have been acquired. As SDL’s international expansion relies on channel partners, having these products
more closely integrated and easier to use by third parties is an increasing requirement as well as enabling SDL to
scale more effectively.
SDL has been assisted in its American growth initiative by a market development grant from NZ Trade and
Enterprise (“NZTE”) that contributed towards the costs of expansion. The NZTE grant was fully utilised during
FY2021. SDL appreciates the financial and market assistance it has received from NZTE.
Software & Technology generated revenue of $24.64 million in FY2021, an increase of 11.9% on the prior year’s
revenue of $22.01 million despite significant decline in UK revenues due to COVID. This growth was from several
sources including incremental revenue from a large multinational organisation that SDL secured around two years
ago (the bulk of the revenue from this client is from underlying print and logistics activity) plus a large US-based
multinational corporation that is progressively rolling out SDL’s Post on Demand and Jupiter platforms globally,
including incremental business as it transfers clients across to SDL. Mid-sized clients in the financial services sector
contributed strongly to US growth, while the UK continued to be COVID restrained (UK revenues in FY2021
declined approximately 50% on the prior year).
Financial Performance
SDL’s growth in revenue and earnings over FY2021 resulted from ongoing expansion of its international business,
predominantly in the US. The New Zealand business continued to struggle for revenue growth from the ongoing
structural decline in volumes and pricing pressure resulting from excess industry capacity, but remains sustainably
profitable.
Cost pressures offset the revenue growth and held Gross Profit flat on the prior year, with the modest increase in
SG&A reducing EBITDA by 3.2% to $4.21 million.
Summary Financial Performance FY2021 FY2020 Percentage
(all figures $000) Change
Total Revenue 35,445 34,030 4.2%
Less: Cost of Goods Sold 21,954 20,571 6.7%
Gross Profit 13,491 13,459 0.2%
Gross Margin (%) 38.1% 39.6%
Less: Selling, General & Admin (SG&A) 9,277 9,105 1.9%
EBITDA 4,214 4,354 -3.2%
EBITDA margin (%) 12.8% 12.8%
Depreciation 1,156 1,151 0.4%
Amortisation 283 330 -14.2%
EBIT 2,775 2,873 -3.4%
Net Interest 70 92 -23.9%
Income Tax 671 915 -26.7%
Net Profit after Tax 2,034 1,866 9.0%
Tax rate 24.8% 32.9%

| 7 |
Note that the prior FY2020 result contained two material one-off items that produced a net gain after tax of $0.23
million. Deducting this from reported earnings produces a normalised profit (note this is a non-GAAP measure)
of $1.63 million, which the Directors believe provides a more accurate picture of how the Company’s underlying
operations performed. Part of the FY2020 one-off gain was from foreign exchange hedging that assisted the Gross
Profit and this largely explains the 150 basis point decline in Gross Margin in FY2021.
The following table highlights first and second half performance for the last two financial years.
SDL Half Financial Years 2H 2H Percent 1H 1H Percent
(all figures $000) FY2021 FY2020 Change FY2021 FY2020 Change
Total Revenue 16,923 18,245 -7.2% 18,522 15,785 17.3%
EBITDA 1,369 2,938 -53.4% 2,845 1,416 100.9%
EBITDA margin 8.1% 16.1% 15.4% 9.0%
Tax rate 9.9% 36.1% 29.5% 21.2%
Balance Sheet, Liquidity and Debt
SDL closed the year with net cash (i.e. cash net of interest bearing debt) on hand on $4.71 million (FY2020 $5.01
million). Note that this net cash figure excludes Right to Use Liabilities arising from the new Lease Accounting
standard; these liabilities are approximately offset by Right to Use Assets. As previously noted, the year-end cash
position is abnormally high from unusually favourable timing of year-end debtor and creditor (creditors are also
elevated at year end) cash flows, along with prepayment of (very low margin) postage by some clients (totalling
around $1.2 million). Given the increase in global health and macroeconomic risks the Directors intend retaining a
prudent approach to balance sheet management.
The Company maintains an overdraft arrangement from ANZ Bank with a $200,000 limit. This was unused during
FY2021.
Selected Balance Sheet and Cashflow Figures FY2021 FY2020 Change
(all figures $000)

Net Cash/(Debt & Borrowings) 4,713 5,012 -299
Non-Current Assets 1,816 2,310 -494
Right of Use Assets 1,210 1,406 -196
Net Other Assets/(Liabilities) (1,458) (2,304) 846
Right of Use Liabilities (1,346) (1,531) 185
Net Assets 4,935 4,893 42
Cashflow from Trading 2,372 2,292 80
Movement in Working Capital 236 3,474 -3,238
Cash Inflow from Operations 2,608 5,766 -3,158
Cash dividends paid 1,903 732 1,171
Capital expenditure for the year was modest at $0.749m, mainly for Right of Use Assets on capitalisation of a new
three year lease to update the New Zealand digital print production platform.
Net assets were broadly flat over the year. Net assets includes intangible assets of around $1.31 million of which
the bulk ($1.06 million) is goodwill and subject to an annual impairment test. The balance of intangibles represents
software and customer contracts from acquisitions which are being amortised.

| 8 |
SDL operates with a largely neutral working capital balance although international expansion and larger “lumpier”
contracts means month-to-month and intra-month cash flow movements have wider fluctuations. The Directors
intend to maintain sufficient liquidity reserves to manage these short-term fluctuations.
Taxation and Dividends
SDL pays full New Zealand tax on locally generated earnings. The international business in FY2021 was able to
utilise some foreign tax losses from the prior year and this lowered the overall tax rate to 24.8% versus 32.9% the
prior year.
The Company’s US business is profitable after new business growth during the prior FY2020 saw the full utilisation
of remaining US tax losses. A portion of amortisation of acquired intangibles (relating to customer contracts and
some of the acquired software) is not tax deductible and this will bias the reported tax rate slightly upwards until
these are fully written off.
The Directors reiterate that SDL intends to pay dividends only to the extent that it can fully impute them and
also subject to the Company not experiencing any one-off requirements for abnormal capital expenditure or any
significant acquisition or investment activity.
Earnings and Dividends per Share FY2021 FY2020 Change
(all figures $000)

Shares on Issue (‘000) 14,640 14,640 0.0%
Reported Earnings per Share (cents) 13.89 12.75 9.0%
Dividend per Share (cents) 11.0 9.0 22.2.%
Dividend Proportion Imputed 100.0% 100.0%
Dividend Payout ratio 79.2% 70.6%
Dividend Payout ratio on NPATA 72.0% 62.6%
The final dividend of 4.0 cents per share is fully imputed and will be paid on 1 October 2021 (expected ex-date of
16 September 2021).
The number of shares on issue remained flat over the year. The Company operates an employee share option plan
(ESOP) for key staff. At year end there were four staff members in this plan with the right to 360,000 shares.
Risk Factors
The physical mail market in New Zealand is continuing its volume decline trend, especially for transactional mail
such as statements and bills. This has been exacerbated by COVID-19 increasing the emphasis towards electronic
communications and the Company believes it is placing further pressure on what is excess printing capacity in the
New Zealand mail house sector. Direct mail/marketing volumes have been more robust and SDL estimates have
shown modest to little decline. Anecdotal industry feedback suggests some industry participants are operating
at low levels of capacity utilisation. This is likely to force industry consolidation at some stage, although industry-
wide pricing and margin pressure may exacerbate before this eventuates. This risk to SDL is partly mitigated by the
Company’s ability to add value through its technology offerings. The Company has several key domestic contracts
that, if lost, could place material pressure on local profitability although much of this is under medium-term contract
(and SDL renewed a major print and mail contract for a multi-year term during FY2021). While SDL expects that
consolidation in the New Zealand print market is inevitable, and has held industry rationalisation discussions with
other participants in the print sector, the Company will not participate unless there is clear value enhancement for
shareholders.

| 9 |
SDL’s top five customers (both domestic and international) provided 49.5% of the Company’s revenue in FY2021
with the largest customer accounting for 28.7% of revenue. Loss of one or more of those customers would cause
financial results to differ materially from those outlined in the FY2022 Outlook section below.
The Company’s software provides critical document management, distributed print, and storage functions for its
clients. SDL needs to ensure it continues to maintain appropriate levels of software development quality control
and sufficient, well-trained staff for software delivery and support. Cyber and data security is a known high risk
area The Company regularly reviews its IT and data security arrangements with external advisors.
The Company operates a single site facility for its New Zealand print and mail house production, with an offsite for
data and server backup. The Directors are conscious of the operational risk a single site implies for digital imaging
and mail house operations. SDL has a reciprocal disaster recovery (“DR”) plan with another printer, as well as
backup capability with a division of its major print equipment supplier.
The Company mainly relies on distribution channel partners to market its software products into the UK, Europe
and the US. This means SDL has little or no contact with many of the end user customers of its products. While
these channel partner arrangements are currently stable there is not guarantee these arrangements will continue.
SDL will continue to ensure its software meets channel partner requirements. The Company has invested in a
limited number of sales people in the UK/Europe and the US.
SDL reiterates comments from the “Effects of COVID-19” section above. At present, the Company sees ongoing
growth from recent customer and contract wins as sufficient to support future growth expectations. However,
the global environment (both in health and economic terms) remains extremely uncertain and this could materially
affect SDL in unforeseen ways.
FY2022 Outlook
SDL confirms previously providing guidance for FY2022 reported net profit of around $2.5 million. This guidance
assumes growth rates in North America continue and some recovery in UK volumes during the second half of the
financial year as that economy begins to normalise from the effects of COVID-19.
The Company expects some customers to continue seeing reduced physical communication volumes, especially
those involved in developing markets, and this will remain a drag on earnings during FY2022. Some costs, especially
in various areas of technology, continue to see pressure and skill shortages; these factors are not expected to abate
during FY2022. The Company has invested significantly in personnel in recent years (both in New Zealand and
internationally) and the skills and staff now in place should be capable of supporting a step change in growth. SDL
expects sufficient organic growth, coupled with growth in business from new and recent customers, to more than
offset the COVID drag and increased cost structure.
Significant volatility remains possible in the range of earnings outcomes for FY2022. The Directors continue to
monitor the world health and macroeconomic outlooks for risk. COVID has made international sales a slower and
more complex process, however, SDL has the software platforms and customer support infrastructure to maintain
growth momentum.

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Management Discussion
and Analysis
FY2021 Result Overview
Solution Dynamics Limited (“SDL” or “Company”) recorded a net profit after tax of $2.03 million for FY2021, a 9.0%
gain on $1.87 million in the prior FY2020 year. As noted in the FY2020 Annual Report, the prior year profit included
a net after tax gain of $0.23 million that is one-off in nature, so the normalised prior period profit for comparative
purposes is $1.63 million, meaning the FY2021 gain in earnings on this adjusted basis is 24.5%. The trend of growth
in international business from SDL’s Software & Technology platforms continues although FY2021 revenue growth
was limited to 11.9% almost solely the result of COVID-19. COVID caused a full year slump in UK revenues in
particular, with volumes in developing markets also constrained. This revenue pressure, combined with onboarding of
larger new customers, required additional IT development and support resources which saw Cost of Goods Sold rise
by 6.7% and Selling, General & Administration (“SG&A”) expenses increase again, although the FY2021 SG&A rise
was a more modest 1.9% versus the substantial rise of 47.5% the prior year.
Cash flow from operations was $2.61 million (FY2020 $5.77 million) and the net cash position at year end was $4.71
million (FY2020 $5.01 million). Part of the year-end cash position represents prepayment of postage by some clients
(around $1.2 million).
The directors have declared a final dividend of 4.0 cents per share (FY2020 6.0 cents) fully imputed, bringing total
dividends for FY2021 of 11.0 cents per share (FY2020 9.0 cents).
Effects of COVID-19
SDL has continued its COVID-19 monitoring and safety policies, aimed at ensuring the Company’s staff remained
safe. This includes the use of segregated teams as required, significant levels of working from home for non-
production staff, health monitoring, and controlled facility access. These have helped ensure no SDL staff member
has been infected by COVID-19 to date. These measures will likely remain in place until a vaccine is widely
implemented in New Zealand and proven to be effective, and some such as working from home are likely to become
a normal part of workplace practice. The Company deeply appreciates the efforts and cooperation by staff in their
flexibility, assistance and compliance with health requirements, and thanks them for perseverance and maintaining
morale in difficult operating circumstances.
It is difficult to accurately assess the financial impact of COVID-19 on SLD’s FY2021 financial result. The largest
effects were on volumes in the UK where SDL’s customers had significantly lower activity for the financial year (in
some cases down around 80%). Additionally, a large customer with international activities that has sizeable activity in
developing markets, was forced to scale back operations in many countries, reducing processing volumes. Less easily
measurable was the lack of direct sales activity in the US particularly. The Company’s best estimate is that COVID
reduced revenues by – very approximately – around 10-12%.
Some modest costs savings continued, with travel remaining near zero. However, COVID appears to be a factor in the
shortage of skills across the technology sector, adding cost pressures that are continuing in FY2022.
As noted in last year’s Annual Report, an SDL director, Mr Elmar Toime, has significant experience in the global
mail and logistics markets (former CEO of NZ Post, former Deputy Executive Chair of the Royal Mail Group, was
a Supervisory Board member of Deutsche Post DHL, and is a non-executive director of Qatar Post). He provided
specialised mail and logistics consulting advice to the Company during the COVID-19 period along with additional
support to SDL’s northern hemisphere operations during a period when travel from New Zealand has not been