Announcement

MKTUPDTE: SDL: Solution Dynamics Update 09:31a.m. 
SDL  
13/06/2019 09:31  
MKTUPDTE  
PRICE SENSITIVE  
REL: 0931 HRS Solution Dynamics Limited  
 
MKTUPDTE: SDL: Solution Dynamics Update  
 
Solution Dynamics (SDL or Company) advises that it has signed a Master  
Services Agreement (MSA) with a multinational organisation that currently  
operates print facilities within the various countries in which it operates.  
SDL's solution will initially involve utilising the Jupiter platform to  
centralise printing and distribution, resulting in significant cost savings  
for the client. A later phase is likely to see a move to Jupiter's platform  
of global distributed print partners, which should provide further  
efficiencies and cost savings.  
 
The first two phases under the MSA - one in June and the other in late 2019 -  
are pilot programmes covering a small portion of the client's communications  
volume. These will ensure the expected benefits are achieved and,  
conditional on successfully executing those phases, SDL expects full  
communications volumes to commence in mid-2020. Subject to full volumes  
commencing as forecast, this contract is expected to be material to SDL's  
revenue growth and on a fully annualised basis (in FY2021) should see SDL's  
revenue increase by around 40%.  
 
The Company continues to experience a very strong pipeline of international  
opportunities.  
 
SDL presently has several contracts in the late stages of closure or  
delivery. It is not clear whether these will fall into FY2019 results or may  
spill over into the following financial year. Additionally, the Company  
continues to see ongoing revenue and margin pressure in the domestic mail and  
print business. SDL is addressing its domestic cost base, however,  
implementing cost savings is taking longer than anticipated because of the  
need to invest in software solutions to automate some processes. Fourth  
quarter trading has seen expected software and development revenues weaker  
than previously forecast, particularly for a major European client, and some  
new business has either been slower to onboard or initial volumes have been  
lower or slower to ramp up than expected. SDL is flagging that even in the  
event these contract and delivery timing issues resolve favourably,  
underlying earnings will nevertheless be materially lower than previous  
guidance, although the Company is not yet in a position to quantify the  
extent. Reported earnings will include write-backs through the Income  
Statement of unearned earn-outs in respect of the Scantech and DTP  
acquisitions undertaken late in FY2018. These write-backs are expected to  
total approximately $280,000. Further guidance will be provided when the  
Company has greater visibility of the expected full year earnings outturn.  
 
For further information please contact:  
 
John McMahon  
Chairman  
+61-(0)410-411806  
 
Nelson Siva  
Managing Director  
+64-(0)21-415027  
End CA:00335971 For:SDL Type:MKTUPDTE Time:2019-06-13 09:31:38