v2 Report - Additional Information Supplement

SDL Solution Dynamics Limited

 

 

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Solution Dynamics Limited

SDL

2 May, 2007, 15:52

GENERAL

Guarantee in favour of financial institution

Guarantee in favour of financial institution

The Company has become aware of a guarantee given by Solution Dynamics Limited (SDL) on March 31, 2003 which remains outstanding.

The guarantee was given in favour of a financial institution that provided finance to a Company to support that Company's acquisition of printing equipment. SDL gave the guarantee at the time it was proposing to merge with the Company. That merger did not proceed. The current Board of SDL understands that the former directors of SDL believed that the guarantee had been released when the merger was terminated. That was not, however, the case.

The current net exposure is estimated to be approx. $216,000. The current amount of the debt guaranteed is $894,559. SDL has been advised that the current value of the equipment subject to a charge to the lender in whose favour SDL has provided the guarantee is $678,500. This valuation is made on a conservative basis.

The Company has indemnified SDL for any losses that SDL may suffer from having given the guarantee. The Company is not in default in its obligations to the lender and, so far as SDL is aware, there are no grounds to believe that the Company will default in any of its obligations.

 

Solution Dynamics Limited

SDL

26 Feb, 2007, 16:53

HALFYR

Half Year Results

Solution Dynamics Reports Satisfactory Turnaround Progress in first Half

Highlights for Six Months to December 31 2006
- Net Profit after Tax before Amortisation $116,000 versus half year loss in corresponding period
- EBITDA up 8% to $479,000
- Group revenue down 8% to $4.98 million as low margin print sales decrease and focus shifts to higher margin core mailhouse business
- Planned investment of $850,000 in upgrading production platform on track for completion in second half
- New executive leadership and dedicated sales, marketing and business development team in place
- Strategic alliances in NZ and Australia extending reach and range of offering.

Customer mail and document management company, Solution Dynamics, has reported satisfactory progress in rebuilding the business during the first six months, achieving a modest half year surplus and progressing on schedule with its production platform upgrade and back to basics service strategy.

"First half results are in line with expectations," said Chief Executive Nelson Siva in the Half Yearly Report for the period to December 31 2006.

"It is pleasing to note achievement of a small surplus of $116,000 before amortisation for the period, attributable to growing existing customer business, improving production efficiencies and disposal of surplus equipment.
"The back to basics strategy and the focus on core business enabled us to increase mail house revenues by 12% which contributed towards a 5% growth in gross margin," he said, adding that the 8% decrease in total revenues was a result of a drop in sales activity in the low margin print segment.

Solution Dynamics is investing $850,000 to build the most up to date and comprehensive production platform available with the capability and capacity to service existing and changing requirements of the mail house market.

"Specific benefits will be delivered by improving data integrity, responsiveness and the introduction of high volume transactional, mail inserting and promotional colour services that will be completed in the June quarter," Mr Siva said.

Progress has also been made in lifting competitive appeal with innovative and efficient product and service initiatives, including an agreement with PrintSoft, a subsidiary of Australia Post, to market DeskDirect, a unique and simple to use desk top direct mail product.

Introduced late last year to existing customers, Mr Siva said early contracts have been secured with a wider market launch scheduled during the June quarter

"We have also formed Trans Tasman alliances with three Australian enterprises to enable cross-border processing of mail," he said.

An upgrade to D?r, Solution Dynamics' proprietary archival and retrieval product, has been completed and is being rolled out to existing customers in New Zealand and Europe. Mr Siva reported that some small new contracts had been secured locally with distribution agreements in target offshore markets currently being sought.

Full Year Outlook

Mr Siva said the period to June 30 2007 would be one of consolidation and investment to position the company for long term, sustainable and profitable growth.

"Although we have made satisfactory progress in rebuilding the business during the first six months, with the new management team working well, much work remains to be completed.

"We expect to deliver a full year result slightly ahead of the previous financial year but with the business in a sounder position to lift performance in the following year."

For further information please contact:
Nelson Siva, CEO
P:+64 9 970 7772, M:+ 64 21 415 027, E: nelsonsi@solutiondynamics.co.nz

Previous
Current half Year $NZ'000; Up/Down %; corresponding half Year
$NZ'000

OPERATING REVENUE
(a) Trading Revenue 4,873; -10%; 5,407
(b) Other Revenue 103; 1044%; 9
(c) Total Operating Revenue 4,976; -8%; 5,416
OPERATING *SURPLUS (DEFICIT) BEFORE TAXATION 30; 124%; (126)
(a) Less taxation on operating result - n/a; 13;
OPERATING *SURPLUS (DEFICIT) AFTER TAX 30; 127%; (113)
(a) Extraordinary Items after Tax [detail in Item 3]
(b) Unrealised net change in value of investment properties
NET *SURPLUS (DEFICIT) FOR THE PERIOD 30; 127%; (113)
(a) Net *Surplus (Deficit) attributable to minority interests
NET SURPLUS (DEFICIT) ATTRIBUTABLE TO MEMBERS 30; 127%; (113)
OF THE LISTED ISSUER

 

Chairman's report

 

Announcement 13 September 2007

Solution Dynamics Narrows Deficit in Year of Consolidation

2006-2007 Highlights

- Full year result shows slight improvement with deficit narrowing to $568,000
- Earnings from high margin services and products up 10.0% with overall gross margin increasing by 7.8%
- EBITDA down 29.6% to $373,000 as a result of non recurring restructuring costs coupled with historically slower second half sales
- Extended customer base with improved and wider offering of higher margin services
- Upgrade of production platform to include colour laser and faster and more accurate mail insertion capabilities completed
- Strategic alliances in NZ and Australia extending reach and range of offering
- Global distribution agreement for Dejar results in initial sales in Australia, UK and Czech Republic.

Business communications outsourcing and document management company, Solution Dynamics, has reported a smaller full year net loss as the Board and management continued to position the company for long term, sustainable and profitable growth.

The Albany-based company ended the year to June 30 in a sounder position reducing its deficit by 7% to $568,000 and was in a much healthier position to lift performance in the new financial year with the completion of the upgrade of the production platform, restructuring of the key sales function and greater cost efficiencies.

"The 2006-07 year was one of consolidation and investment with the result in line with market guidance at the half year," Chairman, Maurice Kidd said in releasing the company's preliminary unaudited results. "There is still a long way to go before the company achieves a satisfactory financial return but there are already tangible results from the restructuring of the sales team and a focus on expanding the total offering to better service existing customers and win new customers from a wider range of sectors."

The back to basics strategy and the focus on the core customer communications business saw the company increasing high margin revenue streams by 10.0%, buoyed by 13.6% growth in mail house revenues, which contributed towards 7.8% growth in gross margin, Mr Kidd said.

The traction from higher margin services and acquisition of new customers achieved in the final quarter did not translate to full year earnings. EBITDA ended down 29.6% at $373,000 as a consequence of restructuring costs, historically slower sales in the second half and the transition away from the low margin print segment.

Improved efficiencies were also beginning to have a positive impact with $350,000 eliminated in sales costs through restructuring, rationalising excess capacity on the laser technology platform and investing in colour imaging and a new, faster mail inserter which not only delivers better process integrity but has broader customer appeal.

Solution Dynamics has formed a number of strategic working alliances with Australian Post subsidiaries, e Letter solutions and PrintSoft, as well as Computershare subsidiary, Customer Communication Services (CCS), and QM Technologies in a bid to generate greater volume business on both sides of the Tasman and in targeted international markets in Europe and the USA.

"We are currently well placed to further extend our Australasian and international market reach through these alliances that broaden our offering to include innovative desktop mail services, cross-border mail processing and distribution and enhancement of our proprietary Dejar archival and retrieval product," Mr Kidd said.

Improvements have also been made in processes to optimise the functionality and efficiency of the new equipment and the company intends to move towards ISO 9000 accreditation in the 2008 year.

Mr Kidd said the outlook for the 2008 year was encouraging with the business in a much stronger position.

"The priority is to continue to reinvest in the business to ensure it has the appropriate resources, skills and service offering and support to be profitable on a year-round basis but no dividend payments are likely in the foreseeable future," he said

For further information please contact:

Chairman, Maurice Kidd on Mobile 021 905 977

Director's Report

 

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