SDL have delayed the announcement of FY’19 prelims in line with the FCA moratorium publicised over the weekend. The Group reiterates the strength of FY’19 trading previously flagged in the update in January. Whilst FY’20E has had a strong start with revenues and pipeline building well, more recently the Group has noted some delayed decision making from customers. SDL’s high degree of recurring revenues and stickiness of product offerings provides some insulation, however management are anticipating a negative Covid-19 revenue impact in the Group’s Language services and Technology operations. A phased plan is in place in order to protect profitability and cash flow, with phase 1 anticipated to deliver £8m of in-year savings, and the Group continues to monitor the situation closely. The Group has suspended FY’20E guidance due to the wide range of potential outcomes. We are also suspending forecasts, although we note that with net cash of £26.3m at 31 December, and £120m of headroom is debt facilities, the Group looks well placed recover quickly once Covid-19 disruption reduces.
