Solution Dynamics lifts profit forecast; shares jump to a record

The company expects net profit of more than $850,000 in the year ending June 30, 2016.

Solution Dynamics [NZAX: SDL], the NZAX-listed software company, raised its forecast for annual profit following better-than-expected trading. Its shares jumped to a record.

The Auckland-based company expects net profit of more than $850,000 in the year ending June 30, 2016, ahead of its earlier forecast for a profit of more than $700,000, it said in a statement. The shares surged 10%  to an all-time high of $1.65.

The company, which provides services such as database and print management, said stronger trading results in the seasonally important October/November period would boost its base profitability. Other factors contributing to an improved outlook included print cost efficiencies, new business wins, additional costs in the UK and New Zealand to support expansion, growth funding from NZ Trade and Enterprise, and benefits from a software development contract.

In the first half, Solution Dynamics expects net profit to rise 7% to about $600,000. The company paid no tax  in the previous year, and pre-tax profit is expected to rise about 49%, it said.

The company is changing its dividend policy to a maximum payout ratio of 70-75%, from a previous policy of at least 75% , to satisfy NZ Trade and Enterprise concerns that it has enough internal funding to support  investment in UK market development.