SDL

As it indicated in an update last month, translation services and software specialist SDL has enjoyed growth across its business, with interim results ahead of all expectations.

Helped by a strengthening euro, revenues were lifted 40% to £76m in the six months to June, with 24% of the growth organic and 16% from acquisitions. Profits rose 27% before tax to £9.1m and £8.4m of cash was generated from operations.

The largest division, translation services, grew by an organic 20% during the period, while the desktop technology segments grew almost twice as robustly, with a seeming trend towards this technological approach. The newer website content arm added its own 11%, boosted by much interest in the US including from the State of Minnesota.

February acquisition Idiom, which added further translation ‘management’ technology, has been dragged up by its lossmaking boots and is ‘on target to achieve break-even at the operating margin by the end of the year’.

Entering the second half with a ‘strong’ sales pipeline, forecasts for the year as a whole can be fairly confidently anticipated. Independent broker Panmure is predicting 24.9p of earnings this year, higher than house broker Investec’s 22.9p.

Backed here in June at 328.25p, SDL had enjoyed a recent spurt to almost 380p on the back of the recent update and a consensus prospective p/e of around 14.7 is not overly demanding. The market for globalisation services is proving robust and the shares are a firm hold.