Solution Dynamics gets approach for Service division

The software company that posted its first profit last year since going public says it has been approached about a possible offer to buy its Service division.

BUSINESSDESK: Solution Dynamics, the software company that posted its first profit last year since going public, says it has been approached about a possible offer to buy its Service division.

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

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

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

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

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

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

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

The shares last traded at 26 cents on the NZAX, giving the company a market value of $3.4 million, and have dropped 26% this year.

SDL had an initial public offering in 2004.

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