SDL 1H FY2022 Financial Results & Interim Dividend

| 1 |
Chairman’s and Chief
Executive’s Report
24 February 2022
Result Overview
Solution Dynamics Limited (“SDL” or “Company”) produced an unaudited net profit after tax of $2.03 million for the half year
(1H FY2021 $1.45 million), a year-on-year increase of 40.2%. This is a record half year profit for the Company and equals the
entire year’s profit in FY2021.
However, the extent of year-on-year first half growth in FY2022 reflects a high concentration of customer jobs that are usually
spread more evenly across the year. This is partly the result of COVID-related delays and disruptions in 2021. International activity
and revenue continued to increase through a combination of new customers and generally growing volume levels, although some
markets and customers remain affected by COVID. NZ print and mail services continues to see pressure, particularly on pricing and
gross margins, although volumes held up well and recent sales efforts have begun to gain traction with some new business success
which is expected to partly contribute later in the second half.
Cash flow from operations was $3.34 million (1H FY2021 $2.54million). The closing net cash position at 31 December was $7.00
million (1H FY2021 $6.06 million), noting that approximately $1.2 million of this cash represents pre-payments of postage by
customers. The Directors have declared a fully-imputed interim dividend of 9.0 cents per share (1H FY2021 7.0 cents).
Nelson Siva and Governance Update
The biggest change – and a loss that cannot be understated – in SDL’s first half was the November passing of long-term CEO,
Nelson Siva, after an illness since early 2020. The significant growth in earnings over the last ten years, along with the Company’s
international expansion are Nelson’s legacy to SDL. More importantly, is the legacy of SDL’s culture; a “can do”, strong customer
service-oriented focus, that drives the ability to tackle complex customer communication problems. Development of the
Company’s communications platforms and capability to sustain growth are testament to Nelson’s strategic and tactical capabilities
and the development of internal management capability is testament to Nelson’s positive approach and people skills.
In November, SDL appointed Mr Patrick Brand, who previously headed SDL’s US and international operations, as the Company’s
new CEO. Patrick has significant depth of global experience in customer communications, including as a member of the executive
leadership team at Pitney Bowes. The Company has subsequently made a number of internal responsibility changes aimed at
enhancing operational and sales effectiveness, as well as providing structure to cover COVID travel restrictions that are likely to
prevent Patrick from being in New Zealand for some time. The Directors are conscious of ensuring both business momentum and
the Company culture are maintained during COVID headwinds and the handover to Patrick.
Operational Commentary
Operating revenue grew 28.1% to $23.72 million with strong international gains offset by declines in New Zealand operations.
Software & Technology revenue increased 42.3%. As noted above, this growth rate was assisted by the timing of customer
activity, although revenue growth continues to be held back by volume weakness in the UK (COVID-affected customers). The
overall New Zealand market remains in structural decline and SDL is now seeing this place pressure on pricing and margins.
SG&A costs rose 20.9% year-on-year (on top of a 6.2% increase in the prior year first half). Part of this is the annualised effect of
prior increase in staff numbers for in-market customer support for account management, applications and DevOps, along with
increased New Zealand and international staffing for software development and IT infrastructure. The Company is also seeing a
broad range of cost pressures across much of its operating structure, with technology costs particularly affected.

| 2 |
SDL’s traditional digital print and document handling services market revenue in New Zealand grew 3.6% year-on-year to $2.14
million (1H FY2021 $2.07 million), although this was cycling a 23.9% drop in the prior comparable period when COVID affected
volumes. Digital imaging processing volumes for the first half were almost flat year-on-year and this along with a sales mix change,
drove the revenue growth. Pricing pressure is expected to continue and the Company has restructured its sales efforts to look to
gain market share. Email volumes in New Zealand were largely flat year-on-year.
SDL continued with its COVID-related work practices around health monitoring, segregated teams and controlled facility access,
which has helped ensure no staff member has been infected to date. Post the half year end, the Omicron variant has begun
circulating in New Zealand. Overseas experience around the high level of Omicron transmissibility suggests it will likely become
endemic in New Zealand during the second half of FY2022. The Company has reiterated its commitment to having effective
health protocols in place. Nevertheless, a key risk is that operations – both SDL’s and our customers – may see disruption
affecting FY2022 earnings.
The Company continues to generate new sales for its post-on-demand (POD) and distributed print solutions. Functionality is
being updated, combining some existing products into a Digital Mail Centre (DMC) and this includes enhancing the platform for
improved scalability and more cost-effective customer onboarding. Sales activity internationally remains mainly focussed on the
enterprise market; particular success has been achieved in the mortgage origination and data breach notice sectors. In the SMB
(small-to-medium business) segment, SDL’s present sales efforts are largely through one very large channel partner and mainly
focussed in Europe. Further development of DMC as noted above, along with sales rollout into the US, UK and New Zealand
markets, is a key priority for 2022 and beyond.
Financial Performance
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 27.4% to $3.62 million (1H HY2021 $2.85
million) on sales revenue that rose 28.1%.
Summary Financial Performance
(all figures $000)
1H FY221H FY21
Yr-on-Yr

$ change
Yr-on-Yr

% change
Total Revenue23,71818,5225,19628.1%
Cost of Goods Sold14,70011,2143,48631.1%
Gross Margin9,0187,3081,71023.4%
Gross Margin (%)38.0%39.5%
Selling, General & Admin Costs5,3974,46393420.9%
EBITDA3,6212,84577627.3%
EBITDA Margin (%)15.3%15.4%
Depreciation476612-136-22.2%
Amortisation97150-53-35.2%
EBIT3,0482,08396546.3%
Net Interest602733122.2%
Net Profit before Tax2,9882,05693245.3%
Taxation95660734957.5%
Net Profit after Tax2,0321,44958340.2%

| 3 |
The EBITDA gain is largely based on the abnormally high concentration of customer activity in the first half of FY2022. Note that
1H FY2022 includes no support from NZ Trade & Enterprise for market development as the grant was fully utilised in FY2021.
The interim result in the prior period also included a net gain from foreign exchange currency hedges that were not repeated in
this half year result. These two items totalled around $0.8 million (pre-tax) in the prior comparable period.
SDL’s taxation rate in 1H FY2022 was 32.0% versus 29.5% in the prior period.
Revenue Analysis
(all figures $000)
1H FY221H FY21
Yr-on-Yr

$ change
Yr-on-Yr

% change
Software & Technology18,64513,0995,54642.3%
Digital Print & Document Handling2,1402,065753.6%
Outsourced Services2,9333,358-425-12.7%
Total Revenue23,71818,5225,19628.1%
SDL’s pipeline of opportunities and sales efforts in the UK, European and US markets points to Software & Technology continuing
to grow revenue, although COVID remains a risk to sales activity and the Company has several large customers where operational
issues, changes to contracts or changes to those customers’ plans could materially alter the revenue outlook.
Balance Sheet, Liquidity and Debt
SDL closed the half year with net cash on hand of $7.0 million, up 15.4% on 1H FY2021 ($6.06 million), although around $1.2
million of this represents customer balances the Company is holding as prepayment for postage (the customers can ask for this
to be returned). A bank overdraft facility of $0.2 million remains in place but is unused. Capital expenditure remains low at $0.04
million in the half, largely for minor items of print and computer equipment.
Selected Balance Sheet and Cashflow
(all figures $000)
1H FY221H FY21
Yr-on-Yr

$ change
Yr-on-Yr

% change
Net Cash on Hand (net of debt)6,9986,06393515.4%
Non-current Assets (excl Right of Use)1,6652,048-383-18.7%
Right of Use Assets826900-74-8.2%
Net Other Liabilities (excl Right of Use)-2,065-2,606541-20.8%
Right of Use Liabilities-974-1,03662-6.0%
Net Assets6,4505,3691,08120.1%
Cashflow from Trading2,7051,88781843.3%
Movement in Working Capital636651-15-2.3%
Cash Inflow from Operations3,3412,53880331.6%
Book value (net assets) increased 20.1% to $6.45 million, mainly the effect of higher first half earnings. Working capital remains
reasonably well managed and SDL has not seen any bad or doubtful debt issues arising as a result of COVID although some
payment times have stretched.

| 4 |
Dividend
SDL has declared an interim dividend of 9.0 cents per share, a 28.6% increase on the prior year.
Earnings and Dividend per Share
1H FY221H FY21
Yr-on-Yr

$ change
Yr-on-Yr

% change
Shares on Issue (000)14,639.814,639.800.0%
Earnings per share (cents)13.889.903.9840.2%
Earnings per share (cents) on NPATA
(a)
14.5410.923.6233.2%
Dividend per share (cents)9.007.002.0028.6%
Dividend proportion Imputed100.0%100.0%n.a.n.a.
Payout ratio (on NPATA)61.9%64.1%n.a.n.a.
(a) NPATA is Net Profit After Tax plus Amortisation (i.e. adding back Amortisation to net profit). This is non-GAAP measure of earnings agreed with NZTE for maximum
dividend payout ratio purposes.
The dividend is fully imputed and the amount represents a payout ratio of 64.9% of earnings per share (61.9% of NPATA). While
the Company maintains a comparatively high net cash position (excluding the customer balances for pre-payments of postage),
the Directors maintain a preference for financial flexibility given the ongoing elevated level of global uncertainty. Furthermore, the
extent of volatility in global markets and economies may provide SDL with the opportunity for step-out or bolt-on acquisitions to
broaden the Company’s product offering or channels to market internationally.
FY 2022 Outlook
SDL has previously provided FY2022 earnings guidance of around $2.5 million.
A number of factors are likely to affect the second half, including price and margin pressure in the New Zealand print and mail
market, greater than expected cost pressures and COVID (Omicron) disruption to revenue in the UK which we had previously
expected would begin to recover during 2H FY2022. While SDL is gaining new business and continues to have a solid pipeline
of opportunity (in both New Zealand and the US), the timing of customer onboarding is unlikely to fully offset these drags on
earnings.
Based on the above factors, SDL is amending its FY2022 guidance to around $2.3 million. Significant volatility is possible around
this guidance range.

---

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 6 months to 31 December 2021
Previous Reporting Period 6 months to 31 December 2020
Currency
Amount (000s) Percentage change
Revenue from continuing
operations
$23,718 +28.1%
Total Revenue $23,718 +28.1%
Net profit/(loss) from
continuing operations
$2,032 40.2%
Total net profit/(loss) $2,032 40.2%
Interim Dividend
Amount per Quoted Equity
Security
$ 0.12500000
Imputed amount per Quoted
Equity Security
$0.09000000
Record Date 25 March 2022
Dividend Payment Date 8 April 2022
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$0.34474044 $0.26837432
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
Please read this in conjunction with the attached results release
and unaudited financial statements for the 6-months ended 31
December 2021.
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

24/02/2022

Unaudited financial statements accompany this announcement.

---

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 Quarterly
Half Year X Special
DRP applies
Record date 25/03/2022
Ex-Date (one business day before the
Record Date)
24/03/2022
Payment date (and allotment date for
DRP)
8/04/2022
Total monies associated with the
distribution
1

$1,317,583 (14,639,810 shares @ $0.09000000
Source of distribution (for example,
retained earnings)
Retained Earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution
2
$0.12500000
Gross taxable amount
3
$0.12500000
Total cash distribution
4
$0.09000000
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
$0.03500000
Resident Withholding Tax per
financial product
$0.00625000
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, Company Secretary
Contact person for this
announcement
Chris Veale, Company Secretary
Contact phone number +64 21 855142
Contact email address chrisve@solutiondynamics.com
Date of release through MAP

24/02/2022





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

---

SIMPLIFYING BUSINESS
INTERIM
REPORT
20
22
For the six months ended 31 December 2021

2
2021 Highlights
For the six months ended 31 December 2021
>Net profit after tax increased 40% to
$2.03 million
>Software & technology revenues grew
42% to $18.65 million
>EBITDA increased 27% to $3.62 million
>Cash flow from operations increased $0.80
million to $3.34 million and net cash at
31 December 2021 was $7.00 million
>Interim dividend of 9.0 cents per
share (up 2.0 cents)
>Full year earnings guidance lowered
to around $2.3 million

02
2021 Highlights
04
Chairman’s and Chief
Executive Officer’s Report
Table of Contents
3
11
Consolidated Financial
Statements
Consolidated Statement of
Profit or Loss .......................11
Consolidated Statement of

Comprehensive Income ..............12
Consolidated Statement of

Changes in Equity ...................13
Consolidated Statement of

Financial Position ...................14
Consolidated Statement of

Cash Flow .........................16
Notes to the Consolidated

Financial Statement .................18
Directory ..........................25
2021 Highlights
For the six months ended 31 December 2021
>Net profit after tax increased 40% to
$2.03 million
>Software & technology revenues grew
42% to $18.65 million
>EBITDA increased 27% to $3.62 million
>Cash flow from operations increased $0.80
million to $3.34 million and net cash at
31 December 2021 was $7.00 million
>Interim dividend of 9.0 cents per
share (up 2.0 cents)
>Full year earnings guidance lowered
to around $2.3 million

2022 Interim Report ̵ Chairman’s and Chief Executive Officer’s Report4
Chairman’s and Chief Executive
Officer’s Report
Result Overview
Solution Dynamics Limited (“SDL” or “Company”) produced an unaudited net profit after tax
of $2.03 million for the half year (1H FY2021 $1.45 million), a year-on-year increase of 40.2%.
This is a record half year profit for the Company and equals the entire year’s profit in FY2021.
However, the extent of year-on-year first half growth in FY2022 reflects a high concentration
of customer jobs that are usually spread more evenly across the year. This is partly the result of
COVID-related delays and disruptions in 2021. International activity and revenue continued to
increase through a combination of new customers and generally growing volume levels, although
some markets and customers remain affected by COVID. NZ print and mail services continues to
see pressure, particularly on pricing and gross margins, although volumes held up well and recent
sales efforts have begun to gain traction with some new business success which is expected to
partly contribute later in the second half.
Cash flow from operations was $3.34 million (1H FY2021 $2.54million). The closing net
cash position at 31 December was $7.00 million (1H FY2021 $6.06 million), noting that
approximately $1.2 million of this cash represents pre-payments of postage by customers. The
Directors have declared a fully-imputed interim dividend of 9.0 cents per share (1H FY2021
7.0 cents).
Nelson Siva and Governance Update
The biggest change – and a loss that cannot be understated – in SDL’s first half was the
November passing of long-term CEO, Nelson Siva, after an illness since early 2020. The
significant growth in earnings over the last ten years, along with the Company’s international
expansion are Nelson’s legacy to SDL. More importantly, is the legacy of SDL’s culture; a “can
do”, strong customer service-oriented focus, that drives the ability to tackle complex customer
communication problems. Development of the Company’s communications platforms and
capability to sustain growth are testament to Nelson’s strategic and tactical capabilities and the
development of internal management capability is testament to Nelson’s positive approach and
people skills.

5
In November, SDL appointed Mr Patrick Brand, who previously headed SDL’s US and
international operations, as the Company’s new CEO. Patrick has significant depth of global
experience in customer communications, including as a member of the executive leadership
team at Pitney Bowes. The Company has subsequently made a number of internal responsibility
changes aimed at enhancing operational and sales effectiveness, as well as providing structure
to cover COVID travel restrictions that are likely to prevent Patrick from being in New Zealand
for some time. The Directors are conscious of ensuring both business momentum and the
Company culture are maintained during COVID headwinds and the handover to Patrick.
Operational Commentary
Operating revenue grew 28.1% to $23.72 million with strong international gains offset by
declines in New Zealand operations. Software & Technology revenue increased 42.3%. As
noted above, this growth rate was assisted by the timing of customer activity, although revenue
growth continues to be held back by volume weakness in the UK (COVID-affected customers).
The overall New Zealand market remains in structural decline and SDL is now seeing this place
pressure on pricing and margins.
SG&A costs rose 20.9% year-on-year (on top of a 6.2% increase in the prior year first half).
Part of this is the annualised effect of prior increase in staff numbers for in-market customer
support for account management, applications and DevOps, along with increased New Zealand
and international staffing for software development and IT infrastructure. The Company is also
seeing a broad range of cost pressures across much of its operating structure, with technology
costs particularly affected.

2022 Interim Report ̵ Chairman’s and Chief Executive Officer’s Report6
SDL’s traditional digital print and document handling services market revenue in New Zealand
grew 3.6% year-on-year to $2.14 million (1H FY2021 $2.07 million), although this was cycling
a 23.9% drop in the prior comparable period when COVID affected volumes. Digital imaging
processing volumes for the first half were almost flat year-on-year and this along with a sales
mix change, drove the revenue growth. Pricing pressure is expected to continue and the
Company has restructured its sales efforts to look to gain market share. Email volumes in New
Zealand were largely flat year-on-year.
SDL continued with its COVID-related work practices around health monitoring, segregated
teams and controlled facility access, which has helped ensure no staff member has been
infected to date. Post the half year end, the Omicron variant has begun circulating in New
Zealand. Overseas experience around the high level of Omicron transmissibility suggests it will
likely become endemic in New Zealand during the second half of FY2022. The Company has
reiterated its commitment to having effective health protocols in place. Nevertheless, a key
risk is that operations – both SDL’s and our customers – may see disruption affecting FY2022
earnings.
The Company continues to generate new sales for its post-on-demand (POD) and distributed
print solutions. Functionality is being updated, combining some existing products into a Digital
Mail Centre (DMC) and this includes enhancing the platform for improved scalability and more
cost-effective customer onboarding. Sales activity internationally remains mainly focussed on
the enterprise market; particular success has been achieved in the mortgage origination and
data breach notice sectors. In the SMB (small-to-medium business) segment, SDL’s present
sales efforts are largely through one very large channel partner and mainly focussed in Europe.
Further development of DMC as noted above, along with sales rollout into the US, UK and New
Zealand markets, is a key priority for 2022 and beyond.

7
Financial Performance
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 27.4% to $3.62
million (1H HY2021 $2.85 million) on sales revenue that rose 28.1%.
Summary Financial Performance
(all figures $000)
1H FY221H FY21
Yr-on-Yr

$ change
Yr-on-Yr

% change
Total Revenue23,71818,5225,19628.1%
Cost of Goods Sold14,70011,2143,48631.1%
Gross Margin9,0187,3081,71023.4%
Gross Margin (%)38.0%39.5%
Selling, General & Admin Costs5,3974,46393420.9%
EBITDA3,6212,84577627.3%
EBITDA Margin (%)15.3%15.4%
Depreciation476612-136-22.2%
Amortisation97150-53-35.2%
EBIT3,0482,08396546.3%
Net Interest602733122.2%
Net Profit before Tax2,9882,05693245.3%
Taxation95660734957.5%
Net Profit after Tax2,0321,44958340.2%
The EBITDA gain is largely based on the abnormally high concentration of customer activity in
the first half of FY2022. Note that 1H FY2022 includes no support from NZ Trade & Enterprise
for market development as the grant was fully utilised in FY2021. The interim result in the prior
period also included a net gain from foreign exchange currency hedges that were not repeated
in this half year result. These two items totalled around $0.8 million (pre-tax) in the prior
comparable period.
SDL’s taxation rate in 1H FY2022 was 32.0% versus 29.5% in the prior period.

82022 Interim Report ̵ Chairman’s and Chief Executive Officer’s Report
Revenue Analysis
(all figures $000)
1H FY221H FY21
Yr-on-Yr

$ change
Yr-on-Yr

% change
Software & Technology18,64513,0995,54642.3%
Digital Print & Document Handling2,1402,065753.6%
Outsourced Services2,9333,358-425-12.7%
Total Revenue23,71818,5225,19628.1%
SDL’s pipeline of opportunities and sales efforts in the UK, European and US markets points to
Software & Technology continuing to grow revenue, although COVID remains a risk to sales
activity and the Company has several large customers where operational issues, changes to
contracts or changes to those customers’ plans could materially alter the revenue outlook.
Balance Sheet, Liquidity and Debt
SDL closed the half year with net cash on hand of $7.0 million, up 15.4% on 1H FY2021 ($6.06
million), although around $1.2 million of this represents customer balances the Company is
holding as prepayment for postage (the customers can ask for this to be returned). A bank
overdraft facility of $0.2 million remains in place but is unused. Capital expenditure remains low
at $0.04 million in the half, largely for minor items of print and computer equipment.
Selected Balance Sheet
and Cashflow
(all figures $000)
1H FY221H FY21
Yr-on-Yr

$ change
Yr-on-Yr

% change
Net Cash on Hand (net of debt)6,9986,06393515.4%
Non-current Assets (excl Right of Use)1,6652,048-383-18.7%
Right of Use Assets826900-74-8.2%
Net Other Liabilities (excl Right of Use)-2,065-2,606541-20.8%
Right of Use Liabilities-974-1,03662-6.0%

9
Selected Balance Sheet
and Cashflow
(all figures $000)
1H FY221H FY21
Yr-on-Yr

$ change
Yr-on-Yr

% change
Net Assets6,4505,3691,08120.1%
Cashflow from Trading2,7051,88781843.3%
Movement in Working Capital636651-15-2.3%
Cash Inflow from Operations3,3412,53880331.6%
Book value (net assets) increased 20.1% to $6.45 million, mainly the effect of higher first half
earnings. Working capital remains reasonably well managed and SDL has not seen any bad or
doubtful debt issues arising as a result of COVID although some payment times have stretched.
Dividend
SDL has declared an interim dividend of 9.0 cents per share, a 28.6% increase on the prior year.
Earnings and Dividend per Share
1H FY221H FY21
Yr-on-Yr

$ change
Yr-on-Yr

% change
Shares on Issue (000)14,639.814,639.800.0%
Earnings per share (cents)13.889.903.9840.2%
Earnings per share (cents) on NPATA
(a)
14.5410.923.6233.2%
Dividend per share (cents)9.007.002.0028.6%
Dividend proportion Imputed100.0%100.0%n.a.n.a.
Payout ratio (on NPATA)61.9%64.1%n.a.n.a.
(a) NPATA is Net Profit After Tax plus Amortisation (i.e. adding back Amortisation to net profit). This is non-GAAP measure of
earnings agreed with NZTE for maximum dividend payout ratio purposes.

10
The dividend is fully imputed and the amount represents a payout ratio of 64.9% of earnings
per share (61.9% of NPATA). While the Company maintains a comparatively high net cash
position (excluding the customer balances for pre-payments of postage), the Directors maintain
a preference for financial flexibility given the ongoing elevated level of global uncertainty.
Furthermore, the extent of volatility in global markets and economies may provide SDL with the
opportunity for step-out or bolt-on acquisitions to broaden the Company’s product offering or
channels to market internationally.
FY 2022 Outlook
SDL has previously provided FY2022 earnings guidance of around $2.5 million.
A number of factors are likely to affect the second half, including price and margin pressure
in the New Zealand print and mail market, greater than expected cost pressures and COVID
(Omicron) disruption to revenue in the UK which we had previously expected would begin to
recover during 2H FY2022. While SDL is gaining new business and continues to have a solid
pipeline of opportunity (in both New Zealand and the US), the timing of customer onboarding is
unlikely to fully offset these drags on earnings.
Based on the above factors, SDL is amending its FY2022 guidance to around $2.3 million.
Significant volatility is possible around this guidance range.
2022 Interim Report ̵ Chairman’s and Chief Executive Officer’s Report

Consolidated Financial Statements
Consolidated Statement of Profit or Loss (unaudited)
For the six months ended 31 December 2021
(NZ$ in thousands, except per share amounts)
6 months
ended 31
Dec 2021
6 months
ended 31
Dec 2020
Year ended
30 Jun 2021
AUDITED
Operating revenue23,69717,69734,302
Grant income218251,143
Total income23,71818,52235,445
Expenses
Employee costs4,9513,8087,673
Research & development3306131,415
Directors fees & salaries270445769
Print & other outsource expenses2,6582,7085,420
Other expenses11,8888,10315,954
Total Expenses20,09715,67731,231
Earnings before interest, tax, depreciation &
amortisation (EBITDA)
3,6212,8454,214
Depreciation4766121,156
Amortisation of intangible assets (software)97150283
Net Interest (income)602770
Profit before income tax2,9882,0562,705
Income tax956607671
Net profit after income tax2,0321,4492,034
CentsCentsCents
Basic earnings per share13.99.913.9
Diluted earnings per share13.69.713.6
The accompanying notes on page 18–24 form part of the consolidated financial statements.
11

Consolidated Statement of Comprehensive Income (unaudited)
For the six months ended 31 December 2021
(NZ$ in thousands)
6 months
ended 31
Dec 2021
6 months
ended 31
Dec 2020
Year ended
30 Jun 2021
AUDITED
Net operating profit after income tax2,0321,4492,034
Exchange differences on translation of foreign
operations
25(103)(91)
Total comprehensive income for the year2,0571,3461,943
122022 Interim Report ̵ Consolidated Financial Statements

Consolidated Statement of Changes in Equity (unaudited)
For the six months ended 31 December 2021
(NZ$ in thousands)
Share
Capital
Employee
Share Plan
Currency
Translation
Reserve
Accum-
ulated
Losses
Total
Equity
Balance 1 July 2020 (audited)5,41329(68)(481)4,893
Issue of shares to employees-9-9
Exercise of employee options-----
Transactions with owners-9--9
Dividend---(879)(879)
Profit for the period after tax--(103)1,4491,346
Total comprehensive income--(103)570467
Balance 31 December 20205,41338(171)895,369
Issue of shares to employees-----
Lapsed (on resignation of member)-(7)--(7)
Exercise of employee options-----
Transactions with owners-(7)--(7)
Dividend---(1,024)(1,024)
Profit for the year after tax---585585
Other comprehensive (loss) income--12-12
Total comprehensive income--12(439)(427)
Balance 30 June 2021 (Audited)5,41331(159)(350)4,935
Issue of shares to employees-44--44
Exercise of employee options-----
Transactions with owners-44--44
Dividend---(586)(586)
Profit for the period after tax---2,0322,032
Other comprehensive (loss) income--25-25
Total comprehensive income--251,4461,471
Balance 31 December 20215,41375(134)1,0966,450
13

Consolidated Statement of Financial Position (unaudited)
As at 31 December 2021
(NZ$ in thousands)
As at

31 Dec
2021
As at

31 Dec
2020
As at 30
Jun 2021
AUDITED
Current Assets
Cash and cash equivalents6,9986,0634,713
Trade & other receivables2,5322,6005,574
Inventories and work in progress219139164
Prepayments795161853
Total Current Assets10,5448,96311,304
Current Liabilities
Trade creditors1,0051,4393,183
Other current liabilities3,9513,0744,138
Other non-financial liabilities(5)22881
Employee benefit liabilities846758808
Lease liability – current748784863
Deferred tax liability(186)7(161)
Total Current Liabilities6,3596,2908,912
Working Capital4,1852,6732,392
142022 Interim Report ̵ Consolidated Financial Statements

(NZ$ in thousands)
As at

31 Dec
2021
As at

31 Dec
2020
As at 30
Jun 2021
AUDITED
Non-Current Assets
Capital works in progress201188195
Property, plant & equipment247413307
Right of use assets8269001,210
Intangible assets156386253
Goodwill1,0611,0611,061
Total Non-Current Assets2,4912,9483,026
Non-Current Liabilities
Lease liability226252483
Total Non-Current Liabilities226252483
Net Assets6,4505,3694,935
Equity
Share capital5,4135,4135,413
Employee share option plan753831
Foreign currency translation reserve(134)(171)(159)
Accumulated losses1,09689(350)
Total Equity6,4505,3694,935
For and on behalf of the Board
John McMahon – Director (Chairman) Andy Preece – Director
Date: 24 February 2022
15

Consolidated Statement of Cash Flows (unaudited)
For the six months ended 31 December 2021
(NZ$ in thousands)
6 months
to 31 Dec
2021
6 months
to 31 Dec
2020
Year to 30
Jun 2021
AUDITED
Cash Flow from Operating Activities
Cash was provided from:
Receipts from sales27,77420,67735,389
Other revenue218251,143
27,79521,50236,532
Cash was applied to:
Payments to suppliers18,57313,36622,696
Payments to employees5,9615,53310,594
GST paid to Inland Revenue(80)65634
24,45418,96433,924
Net Cash Inflow from Operating Activities3,3412,5382,608
Cash Flow from Investing Activities
Cash was applied to:
Purchase of property, plant & equipment &
capital works in progress
3853749
Purchase of software & intangible assets---
3853749
Net Cash (Outflow) from Investing Activities(38)(53)(749)
Cash Flow from Financing Activities
Cash was provided from:
Finance lease additions--600
--600
162022 Interim Report ̵ Consolidated Financial Statements

(NZ$ in thousands)
6 months
to 31 Dec
2021
6 months
to 31 Dec
2020
Year to 30
Jun 2021
AUDITED
Cash was applied to:
Payment of dividends5868791,903
Interest paid6022770
Finance lease liabilities372528785
1,0181,4342,758
Net Cash (Outflow) from Financing Activities(1,018)(1,434)(2,158)
Net change in cash and cash equivalents2,2851,051(299)
Add cash & cash equivalents held at beginning of year4,7135,0125,012
Finance Facility and Cash Balance at End of Year6,9986,0634,713
Reconciliation of net deficit after income tax for the
year with net cash inflow/ (outflow) from operating
activities
Net surplus after income tax2,0321,4492,034
Interest expense (reclassified as financing activity)602770
Add non-cash items:---
Depreciation & amortisation of assets5737621,439
(Gain) on foreign exchange(21)(530)(657)
Bad and doubtful debts17(35)(35)
Other non-cash items44332(479)
Cash Flow from Trading2,7052,0052,372
Add movements in Working Capital636533236
Net Cash Inflow from Operating Activities3,3412,5382,608
17

Notes to the Consolidated Financial
Statements
(unaudited)
For the six months ended 31 December 2021
18
1. General Information and Basis of Preparation
The condensed interim consolidated financial statements (the interim financial statements)
are for the six months ended 31 December 2021 and are presented in NZ$, which is the
functional currency of the parent company. They have been prepared in accordance with New
Zealand generally accepted accounting practice and comply with New Zealand Equivalent to
International Accounting Standard 34 (NZ IAS 34) and IAS 34 “Interim Financial Reporting”
(IAS 34). They do not include all of the information required in annual financial statements
in accordance with IFRS’s and should be read in conjunction with the consolidated financial
statements for the year ended 30 June 2021.
Solution Dynamics Limited is the Group’s ultimate parent company. It is a limited liability public
company incorporated and domiciled in New Zealand and is listed with the New Zealand Stock
Exchange on the NZX. The address of its registered office and principal place of business is 18
Canaveral Drive, Auckland, New Zealand.
The Group comprises Solution Dynamics Limited and its wholly owned subsidiaries Solution
Dynamics (International) Limited (based in the United Kingdom), Solution Dynamics
Incorporated (based in the United States of America) and Déjar International Limited (non-
trading).
The Group offers a range of integrated solutions encompassing data management, electronic
digital printing, web presentment and archiving, fulfilment, traditional print services, scanning,
data entry and document management.
The interim financial statements for the six months ended 31 December 2021 and the related
comparative interim period, are unaudited. Due to seasonal variability financial information
from the audited financial statements for the immediately preceding financial year ending 30
June 2021 have also been included.
The unaudited interim financial statements for the Group for the six months ended 31
December 2021 were authorised for issue on 24 February 2022 in accordance with a resolution
of the directors of the Company.
2022 Interim Report ̵ Notes to the Consolidated Financial Statements

19
2. Significant Accounting Policies
These interim financial statements have been prepared in accordance with the accounting
policies adopted in the Group’s most recent annual financial statements for the year ended 30
June 2021.
Certain comparative information has been reclassified to conform with the current period’s
classification.
3. Estimates
When preparing the interim financial statements, management undertakes a number of
judgements, estimates and assumptions about recognition and measurement of assets,
liabilities, income and expenses. The actual results may differ from the judgements, estimates
and assumptions made by management, and will seldom equal the estimated results.
The judgements, estimates and assumptions applied in the interim financial statements,
including the key sources of estimation uncertainty were the same as those applied in the
Group’s last annual financial statements for the year ended 30 June 2021.
4. 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; Software & technology, Outsource Services and Digital Imaging & 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.

20
> 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.
• Digital Printing & Output Services is solely New Zealand revenue and includes the
printing of client’s information digitally using high speed laser printers followed by output
fulfilment, lodgement and distribution of those documents using a variety of machine and
other processes.
• Outsourced Services, not all components of Solution Dynamics’ services in New Zealand
are produced internally. External elements such as domestic New Zealand 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.
An overhead structure including sales, marketing and administration departments provides
services for all of the above revenue streams.
There are no reconciling items to note due to the management information provided to the
Chief Operating Decision Maker using the same standards and accounting policies as those
used to prepare the financial statements.
2022 Interim Report ̵ Notes to the Consolidated Financial Statements

21
(NZ$ in thousands)
6 months to
December 2021
6 months to
December 2020
Year to

June 2021
Software & Technology18,64579%13,09971%24,63570%
Digital Printing & Document
Handling Services
2,1409%2,06511%4,16112%
Outsourced services2,93312%3,35818%6,64918%
Total income23,718100%18,522100%35,445100%
Less cost of sales14,70062%11,21461%21,95462%
Gross margin9,01838%7,30839%13,49138%
Selling, general & administration5,39723%4,46324%9,27726%
Earnings before interest, tax,
depreciation & amortisation
3,62115%2,84515%4,21412%
Depreciation4762%6123%1,1563%
Amortisation970%1501%2831%
Interest600%270%700%
Income tax9564%6073%6712%
Operating Profit after income tax2,0329%1,4498%2,0346%
Segment Assets
Assets are not segmented between service streams.
Information about Major Customers
Included in revenues for Solution Dynamics of $23.718 million (2020: $18.522 million) are
service revenues of $10.839 million (2020: $6.399 million) which arose from sales to the
Company’s largest customer.

22
Geographical Information
The Group has customers in New Zealand, Australia, United States of America and Europe.
Revenue from external customersNon-current assets
(NZ$ in thousands)
6 months
to 31 Dec
2021
6 months
to 31 Dec
2020
Year to

30 Jun
2021
As at

31 Dec
2021
As at

31 Dec
2021
As at

30 Jun
2021
New Zealand6,5487,63314,6672,4802,9052,999
Australia195199426---
United States of America15,6499,71818,291-2915
Europe1,3269722,061111412
Total23,71818,52235,4452,4912,9483,026
5. Cash & Cash Equivalents
(NZ$ in thousands)
As at

31 Dec
2021
As at

31 Dec
2020
As at

30 Jun
2021
Cash and cash equivalents6,9986,0634,713
Total Finance Facility and Cash 6,9986,0634,713
Solution Dynamics has an overdraft facility in place with the ANZ Bank at an interest rate of
7.2% 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 Security Agreement over the assets of the parent
Solution Dynamics Limited.
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.
2022 Interim Report ̵ Notes to the Consolidated Financial Statements

23
6. Share Capital & Share-based Payments
Solution Dynamics Limited has 14,639,810 ordinary shares (2020: 14,639,810 ordinary shares)
each fully paid.
The Group operates equity-settled, share-based compensation plans, under which employees
provide services in exchange for non-transferable options. The value of the employee services
rendered for the grant of non-transferable options is recognised as an expense over the vesting
period, and the amount is determined by reference to the fair value of the options granted.
Number of shares
Shares in 000s
As at

31 Dec
2021
As at

31 Dec
2020
As at

30 Jun
2021
Shares Issued and Fully Paid:
- Beginning of the Period14,64014,64014,640
- Share Issue (exercise of options)---
Shares Issued and Fully Paid14,64014,64014,640
Employee Share Option Plan:
- Beginning of the Period360160160
- Granted-80360
- Vested---
- Lapsed (on resignation of staff member)(80)-(160)
Shares Authorised for Share-based Payments280 240360
Total Shares Authorised at the end of the Period14,92014,88015,000
The 280,000 options outstanding (2020: 240,000) were at a weighted average exercise price
of $2.35 (2020: $1.98). 80,000 options are eligible to be exercised from January 2022 with
200,000 options eligible to be exercised from March 2024.

24
7. Related Parties
Transactions between related parties include payments to shareholders, directors and their
companies and senior executives, also being shareholders.
Related party transactions from 1 July 2021 to 31 December 2021 were as follows:
• Key management were paid $1,036,791 (as employees of Solution Dynamics Limited)
during the period (2020: $1,153,350) and were owed $129,637, including annual leave,
(2020: $201,700).
• Salaries paid to directors are disclosed in the Consolidated Statement of Profit or Loss.
8. Events after the Balance Date
At the board meeting of 24 February 2022, the directors resolved to pay a fully imputed interim
dividend of 9.0 cents per share, amounting to $1,317,583 (2020: the directors approved the
payment of a fully imputed interim dividend of 7.0 cents per share, amounting to $1,024,787).
There were no other significant events after balance date.
2022 Interim Report ̵ Notes to the Consolidated Financial Statements

Directors
John McMahon – Non-independent
Chairman
Julian Beavis - Independent
Elmar Toime – Independent
Andy Preece – Independent
Lee Eglinton - Independent
Indrajit Nelson Sivasubramaniam (Nelson
Siva) – Chief Executive Officer (Retired
Nov ’21)
Auditors
Grant Thornton New Zealand Audit Limited
Grant Thornton House
152 Fanshawe Street, AUCKLAND
Bankers
ANZ National Bank Limited
9-11 Corinthian Drive, Albany
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
(non-trading)
18 Canaveral Drive, Albany
AUCKLAND
PO Box 301248, Albany
AUCKLAND 0752
Directory
25

26

27

2022 Interim Report ̵ Chairman’s and Chief Executive Officer’s Report28
New Zealand ̵ United Kingdom ̵ United States of America