RNS Number:1854I
SDL PLC
30 March 2000
SDL plc announces
Acquisition of International Translation and Publishing Limited ("ITP") for
#14.25 million;
Fund raising of #22.0 million;
and
Preliminary announcement of unaudited results for
the year ended 31 December 1999
London, 30 March 2000. SDL plc ("SDL" or "the Company"), today announced that
it has entered into a conditional agreement to acquire ITP, a provider of
globalization solutions, for a consideration of IR#18.4 million (#14.25
million). The Company also announces the successful raising of #22.0 million
by way of a 1 for 6 rights issue and announces its maiden unaudited
preliminary results for the twelve months ended 31 December 1999, the first
results since its flotation on the Official List in December 1999.
Commenting on the acquisition, fund raising and preliminary results, Mark
Lancaster, Chairman and Chief Executive of SDL, said:
"Following the launch of SDLWebflow in January, SDL has received significant
interest from corporates who recognise the necessity for multilingual web
sites and require an efficient means of maintaining quality content in
international markets. The acquisition of ITP allows the Company to not only
supply the leading technology available in the market but also to maintain
existing and new clients' globalisation demands and to provide an excellent
platform to launch new workflow technology in the near future.
"We have been delighted by the positive response from investors and the funds
raised will give us the critical mass required in a fast growing B2B area in
the technology arena.
"We are also pleased that our results reflect a strong final quarter of
trading, a trend which has continued through to the current financial year".
For further information please contact:
Mark Lancaster Tel: 01628 410127
Chairman & Chief Executive
Rachel Fisher Tel: 01628 410100
Corporate Communications rfisher@sdlintl.com
Bobby Morse Tel: 0207 606 1244
Merlin Financial bmorse@merlinfinancial.com
The attached has been extracted from the Prospectus which will be sent to
shareholders following this announcement:
- The acquisition of ITP
- Information on ITP
- Acquisition strategy
- Details on the fund raising
- Preliminary unaudited Results
- Chairman & Chief Executive's Statement
- Unaudited consolidated profit and loss account
- Unaudited consolidated balance sheet
- Summarised cash flow statement
The Acquisition of ITP
The consideration for the Acquisition of ITP is IR#18.4 million (#14.25
million) payable in cash on Completion. In view of the size of the
transaction, the Acquisition is conditional upon, inter alia, the necessary
approval being given by shareholders at the Extraordinary General Meeting of
the Company to be held at 11.00am on 17 April 2000 at the offices of Olswang,
90 Long Acre, London WC2 9TT.. The Acquisition is also conditional on the
Underwriting Agreement becoming unconditional and not having been terminated
in accordance with its terms. Completion is expected to occur by 16 May
2000.
The Directors believe that the Acquisition offers SDL an opportunity to
accelerate its development and maintain its position as a leading provider of
globalization solutions in its chosen markets. ITP will bring to the Group
complimentary technology and service support which the Directors believe will
assist in the rapid introduction of SDLWebFlow into the market place and to
raise the Company's profile in its chosen markets.
Information on ITP
ITP provides a range of globalization services and has developed certain
internal proprietary technology. The main two being EAGLE, a web based asset
management system, and SWIFT, a Web based workflow management system. It has a
number of large multinational clients primarily within the Information
Technology industry. It is a subsidiary of DCC plc, a company quoted on the
Dublin Stock Exchange, which controls 90 per cent. of the issued share capital
with the remaining 10 per cent. is held by Enterprise Ireland. ITP was
established in 1989 in Dublin, Ireland to deliver localization services to the
Information Technology sector. ITP has since grown into an organisation with
over 220 employees servicing its clients in approximately 40 languages from
offices in Europe, US and Asia. Its key customers include Oracle, Lexmark,
Sybase and Hewlett Packard.
The business of ITP comprises:
Technology
Web based management system
This system has been developed for use by clients to address their need to
identify, manage and re-use translated materials. It also addresses the need
for localisation industry leaders to create a global workflow localisation
solution.
The technology stores information assets in multiple languages (English is the
source, many other languages are the targets) and enables comprehensive
e-review and e-approval work flow. It can be customized to reflect the
client's corporate image and it features sophisticated search capabilities for
content retrieval and viewing.
Web based workflow management system
This technology is designed to achieve incraesed levels of productivity and
turnaround speeds on localisation projects by using workflow techniques.
Web translation services
ITP provides two fundamental approaches to Internet Web localisation:
(a) consulting led approach comprising analysis of a client's existing site
and methods, planning and application selection, as well as site localisation
and maintenance. These services are charged on a time and materials basis; and
(b) a product oriented approach in which ITP designs a Web localisation
solution, builds the solution and manages it on an on-going basis.
Web-sites and e-commerce databases often change or grow monthly, weekly or
even daily. A site is often created by a variety of authors using a variety of
tools, and contains multiple data sources and file types. Because they are
usually sales and marketing-oriented, Web sites need to be correctly adapted
to the culture, not just the language, of the target market. Web sites often
contain artwork with text. This does not allow simple translation, as each
picture may need to be rebuilt from scratch in the new language. ITP is
capable of localizing clients' Web sites into a number of languages
simultaneously.
Localisation services
ITP offers software globalisation services to its clients. The company
receives the client's product and localizes and re-engineers it to create a
product that is a recreation of the original, reflecting the language, culture
and business practices of the target market.
In addition, ITP provides simultaneous shipment capability thereby allowing
work to begin on internationalising and localising releases that are still in
its clients' work in progress. This enables a simultaneous global shipment of
its clients' globalized products.
FastTrack Localisation
In addition to the larger scale localisation services detailed above, ITP
provides a rapid turn-around translation service for smaller to medium
software or hardware projects (up to 2,500 words) at a fixed price. The text
file or software is submitted on-line by the client to the ITP Web-site and an
initial quote is provided on-line. ITP's centralized localisation group then
carries out its evaluation of the project, contacts the client with a
confirmed quotation and subsequently returns the translated product on-line to
clients within 72 hours.
Financial information
For the 9 months ended 31 December 1999, ITP incurred a loss before taxation
of IR#2.3 million (#2.0 million) (year ended 31 March 1999: IR#1.7 million
(#1.5 million), on turnover of #IR 9.8 million (#8.1 million) (year ended 31
March 1999: IR#13.8 million (#12.0 million). Net liabilities at 31 December
1999 were IR#1.3 million (#1.0 million) (31 March 1999: net assets of #IR 1.1
million (#0.9 million)). Irish punts amounts have been translated into
Sterling using average rates for the respective periods in relation to losses
and turnover and at closing rates in relation to the net assets/liabilities.
Strategy behind the acquisition
SDL has developed rapidly since its incorporation and during this time has
expanded both its customer base and activities and has developed new
technologies to provide globalization solutions in a dynamic market place. At
the time of the Listing in December 1999, SDL stated that the access to equity
finance to enable expansion through acquisitions in its chosen market was one
of the reasons for the flotation. The Acquisition fits closely with this
stated strategy.
The market for globalization solutions is consolidating rapidly and, in order
for SDL to continue to be a leading player in this market, the Directors
believe it is necessary to be at the forefront of this consolidation. The
acquisition of ITP offers an excellent opportunity for SDL to further increase
its market presence. The technologies developed by ITP will improve the
product solutions, such as SDLWebFlow, which are currently offered by SDL.
The increased infrastructure and skills base will enable the Enlarged Group to
offer a more comprehensive and wider range of globalization solutions to its
customers. This increased distribution network will, in the Directors' opinion
also enable SDL to roll out SDLWebFlow and its other localisation services
more quickly through ITP's client base as well as an increased presence in
more geographical markets.
In addition, the Directors consider that the business of ITP is a good
strategic fit with that of the existing SDL businesses. Although certain
reorganisation and restructuring will be required, the businesses together
will be able to benefit from the relevant strengths of each in certain
markets. ITP has over the last two years been loss making and the Directors
are confident that a larger business can be created with a lower aggregate
cost base benefitting from the economies of scale resulting from the merger of
the two businesses.
Fund raising
The Company proposes, by way of the Rights Issue, to raise #22.0 million
(approximately #21.2 million net of expenses) by offering up to 5,638,470 new
Ordinary Shares (representing approximately 16.7 per cent. of the existing
issued ordinary share capital of the Company) at 390p per share payable in
full on acceptance. The Rights Issue will be made on the following basis 1
Rights Issue Shares for every 6 Existing Ordinary Shares held by Qualifying
Shareholders on the Record Date, and so in proportion for any other number of
Ordinary Shares then held. The Rights Issue Shares will, when issued and fully
paid, be identical to and will rank pari passu in all respects with the
Existing Ordinary Shares, including the right to receive in full all dividends
thereafter declared on the Existing Ordinary Shares.
The Directors (save for Christpher Batterham and David Svendsen) together with
their associated interests have irrevocably undertaken renounce in favour of
certain institutional investors procured by Collins Stewart their entitlements
to Rights Issue Shares. Christopher Batterham has irrevocably undertaken not
to take up (and to renounce in favour of certain institutional investors
procured by Collins Stewart) such numbers of Rights Issue Shares as will
enable him to realise sufficient funds to enable him to subscribe for the
balance of his entitlement to Rights Issue Shares. David Svendsen has
undertaken to take up all his entitlements.
The placing of the entitlements referred to above will be effected by Collins
Stewart at a price of 10p per Rights Issue Share.
The Rights Issue has been fully underwritten by Collins Stewart. Any Rights
Issue Shares not taken up under the Rights Issue will be dealt with pursuant
to the provisions of the Underwriting Agreement.
The Rights Issue is conditional upon:
(a) the passing of the resolution to be proposed at the Extraordinary General
Meeting;
(b) the Underwriting Agreement having become unconditional and not having been
terminated in accordance with its terms prior to Admission; and
(c) Admission of the Rights Issue Shares, nil paid, being granted and having
become effective by 8.00 am on 18 April 2000 (or such later time as
Collins Stewart may agree but, in any event, not later than 8.00 am on 2
May 2000).
Application has been made to the London Stock Exchange for the Rights Issue
Shares to be admitted to the Official List. It is expected that Admission will
take place and that dealings will commence in the Rights Issue Shares,
nil-paid, on 18 April 2000.
Preliminary unaudited results
SDL's preliminary unaudited results for the year ended 31 December 1999 are as
follows:
Highlights:
Unadjusted
Forecast
Year to Year to Year to
31 December 31 December 31 December
1999 1999 1998
#'000 #'000 #'000
Net Turnover 12,960 12,650 10,098
Operating (loss)/profit before
provision for NIC on share options
(see note 2 to financial statements
below) (525) (565) 292
(Loss)/profit before taxation (796) (615) 209
(Loss)/profit after taxation (762) (623) 109
Basic (loss)/profit per share (pence) (2.63) (2.15) 0.41
Statement of Chairman and Chief Executive, Mark Lancaster
I am pleased to be able to report on an extremely dynamic year for SDL and it
subsidiaries culminating in the successful flotation of the business on the
London Stock Exchange in early December. The Group has continued to develop
since the year end and we are today announcing that we have entered into a
conditional agreement to acquire ITP Limited ('ITP'), a group operating in
similar areas of globalisation to SDL, for IR#18.4 million (#14.25 million).
The SDL Group and its business
SDL trades under the name of SDL International and is a provider of
globalisation solutions to a wide variety of multinational businesses.
Globalisation solutions have moved beyond translation services to encompass
product solutions, localisation, including re-engineering and translation of
user interfaces, on line help and databases, and internationalisation,
including re-engineering source code to that compatibility is maintained with
country specific operating systems and software.
SDL has been at the forefront of the development of product based solutions
for globalisation and significant investment and management time has been
invested in earlier years and through 1999 in the development of software
products to maintain the Group's position. This investment resulted in the
launch of SDL WebFlow in January 2000 and of version 3.0 of SDLX in February
2000. The combination of these products enables clients to maintain their
multilingual web sites synchronised with the language and content of the host
site. In particular SDLWebFlow automates the processes involved in
maintaining multilingual web sites and allows the Group to leverage its
existing skills and resources to the Internet market. To support this client
need, the Group now operates from 14 offices in 8 countries in Europe, United
States of America and Asia.
The evolution of the Internet and the expansion of the global market place has
significantly increased the need for product solutions offered by focused
businesses such as SDL. The globalisation industry remains fragmented, but
consolidation is increasing rapidly and the developments by SDL over the past
year will enable it to remain in the forefront of this process.
Flotation
The flotation in December 1999 raised approximately #7 million (before costs)
for the Company, with the main objectives being the marketing and further
development of SDLWebflow, bolt on acquisitions to enable the Group to expand
its global reach and increase the solutions offered to its client base and to
enable it to increase its critical mass and presence so as to remain in the
consolidation arena. Since the flotation your Board has put this money to good
use with the formal launch and marketing of SDLWebFlow and the acquisition of
ATR Information AB and Aslan Localisation Services Limited. In addition to
these specific transactions the Group has moved to strengthen its sales
presence in the US market place and has increased its business from its
existing customers.
The launch of SDLWebFlow in January 2000 was earlier than anticipated and has
attracted considerable interest from web and internet related businesses as
well as from within the Group's traditional business arenas. This has
resulted in contracts in excess of US$3 million.
The acquisition of ATR based in Stockholm, for a consideration of #335,000
satisfied in shares and cash, has added a Nordic hub to the Group's
infrastructure considerably strengthening its Scandinavian offering as well as
bringing a number of new clients. Aslan, which specialises in localisation
testing, responds to the needs of a number of clients and potential clients
wishing to outsource their localisation testing needs. The consideration for
the acquisition amounted to IR #257,000 (#209,000) again partly in shares and
partly in cash.
Financial performance and review
The revenues we are announcing today are ahead of the forecast made in the
prospectus at the time of the Flotation. Sales for the year amounted to #13.0
million, 28 per cent. ahead of the 1998 sales of #10.1 million. The loss
before taxation amounted to #796,000 (1998 profit of #209,000). As noted
above, in 1999 the Group has concentrated on the development of its product
solutions and the implementation of the appropriate management structure to
manage this development and in preparation for the flotation. This has
resulted in the losses as reported with approximately #847,000 (1998 #662,000)
being spent on product development. However, despite this strategy the Group
maintained the gross margin at 44 per cent. (1998 42 per cent.).
The sales benefited from the earlier commencement of a significant contract
where the Company had not originally anticipated obtaining the client product
information and instructions to commence localisation until early in 2000. In
addition the Company had allowed for the anticipated effects of Y2K concerns
which in the event were not as noticeable as expected.
While the loss before taxation benefited from the earlier commencement noted
above, the final loss was in excess of the forecast in the prospectus as a
result of an adjustment to increase the provision for potential National
Insurance Contributions (NIC) arising on employee share options. Current
taxation legislation requires the Company to provide NIC on the potential gain
between the market prices at the point of grant and exercise of options. The
Group has certain options capable of exercise between 2 and 4 years of grant
and provides for this NIC based on the year end share price. At the time of
the forecast made by the Directors in the prospectus the best estimate of this
future price was the proposed pricing at Impact Date. The share price
subsequently rose from #1.34 at Impact Date to #4.06 at 31 December 1999,
resulting in an increased provision to #282,000.
The 1999 results prior to goodwill and the NIC on employee share options noted
above show a loss of #190,000 (1998: profits #362,000). The goodwill figure in
the current year arises as a result of a change in the Group's estimate of
amortisation from 20 to 8 years and hence #115,000 relating to previous years.
The loss per share for the year was 2.63p (1998: profit per share of 0.41p),
with a fully diluted loss per share of 2.63p (1998: profit per share of
0.38p). The loss per share for the year before goodwill, flotation costs and
NIC on employee share options was 0.66p (1998 - profit per share of 0.67p).
As at 31 December 1999 the Group had shareholder funds of #9.3 million (1998:
#3.3 million) and net cash balances of #7.8 million (1998: #0.9 million). The
net cash flow from operating activities amounted to #937,000 (1998: #733,000).
Acquisition of ITP
SDL has today announced that it has entered into a conditional agreement to
acquire the whole of the issued share capital of ITP fpr IR#18.4 million
(#14.25 million). ITP provides a range of globalisation services and has
developed certain technology which assists in the provision of such services.
It has a wide range of multinational clients primarily in the IT industry and
its turnover for the 9 months ended 31 December 1999, the latest audited
numbers, was IR#9.8 million. ITPO is based in Dublin and has a global
organisation employing over 220 employees servicing clients in approximately
40 languages.
The acquisition fits closely with the strategy indicated at the time of the
flotation to expand through acquisition in SDL's chosen market place. This
enables SDL to remain a leading player in the consolidating globalisation
market place and increase its market presence. The increased infrastructure
and skills base will enable the enlarged group to offer a more comprehensive
and wide range of globalisation solutions to its customers. The technologies
developed by ITP will improve the product solutions, such as SDLWebFlow,
offered by SDL. The increased distribution network created by the enlarged
group will enable the roll out of SDLWebFlow and the associated localisation
services more quickly.
The Board consider that the business of ITP is compatible to that of the
existing SDL Group businesses. Certain reorganisation and restructuring will
be required and, while ITP has been loss making over the last two years, the
Directors are confident that a larger business can be created with lower
aggregate cost base with economies of scale resulting from the merger.
To fund the acquisition of ITP and to provide necessary working capital to
integrate the business, the Company proposes to raise #22 million (before
expenses) by way of a Rights Issue by offering 5,638,470 new ordinary shares
(representing approximately 16.7 per cent. of the existing issued ordinary
share capital of the Company) at 390p per share payable in full on acceptance.
The Rights Issue will be made on the basis of 1 new ordinary share for every 6
existing ordinary shares.
Full details of the proposed acquisition of ITP, the Rights Issue and the
notice of an Extraordinary Meeting to approve the Acquisition are set out in
the circular of today's date which accompanies this Preliminary Results
Announcement.
Your Board, which has been advised by its financial adviser Collins Stewart,
considers the proposals for the acquisition of ITP to be in the best
interests of the Company and the Shareholders as a whole.
Management and Employees
I would like to take this opportunity to thank the management and employees
for all their continuing efforts and dedication in assisting your Board
develop the Group over the past year. This has manifested itself in the
successful flotation of the business and the fact that the Group is poised to
continue to hold its leadership position in the globalisation industry.
The Future
As more companies get a better understanding of the Internet and the value it
can bring to their business, we will find that not only the larger
corporations will be able to take advantage of the significant opportunities
the global web provides, but also, and probably more importantly, the smaller
companies will have access to a global market with far lower barriers to
entry. The Internet will become central to its company's philosophy and its
ability to reach customers, partners and employees instantly world wide. The
task of controlling the content of a multi-language website is enormous. The
requirements for advanced multilingual content management for the web will
therefore become a necessity in a 1-2 year timeframe as people start to adopt
the web in earnest.
Mark Lancaster
Chairman
Unaudited consolidated profit and loss account for year ended 31 December 1999
Year ended Year ended
31 December 31 December
1999 1998
#'000 #'000
Net Turnover 12,960 10,098
Operating (loss)/profit (808) 292
Interest payable less interest receivable (net) 11 (83)
(Loss)/profit on ordinary activities before taxation (796) 209
Taxation on profit/loss on ordinary activities 34 (100)
(Loss)/profit on ordinary activities after tax (762) 109
(Loss)/profit attributable to shareholders (762) 109
Unaudited consolidated balance sheet as at 31 December 1999
Year ended Year ended
31 December 31 December
1999 1998
#'000 #'000
Fixed Assets
Intangible Fixed Assets 1,044 1,334
Tangible Assets 1,006 1,080
Investments 12 -
2,062 2,414
Current Assets
Debtors 2,536 2,096
Cash at bank and in hand 7,826 861
10,362 2,957
Creditors: amounts falling due within one year (2,547) (1,695)
Net current assets 7,815 1,262
Total assets less current liabilities 9,877 3,676
Creditors: amounts falling due
after more than one year (254) (415)
Provision for liabilities and charges (282) -
Net assets 9,341 3,261
Capital and reserves
Called up share capital 369 49
Share premium account 9,576 2,479
Profit and loss account (604) 733
Capital employed 9,341 3,261
Summarised cash flow statement for year ended 31 December 1999
Year ended Year ended
31 December 31 December
1999 1998
#'000 #'000
Net cash inflow/(outflow) from
operating activities 937 733
Returns on investment and servicing of finance 11 (83)
Taxation (106) (74)
Capital expenditure and financial investment
Purchase of tangible fixed assets (540) (568)
Payments to acquire investments (12) -
Receipts from sale of tangible fixed assets 77 -
Acquisitions and disposals
Purchase of subsidiary undertaking - (8)
Cash inflow/(outflow) before financing 367 -
Financing 6,584 680
Increase/(decrease) in cash in the period 6,951 680
Notes to unaudited financial statements
1. These preliminary financial statements do not constitute statutory
accounts within the meaning of section 240 of the Companies Act 1985 and are
unaudited. The statements have, with the following exception, been prepared on
the same basis as set out in the previous year's annual accounts. The
exception relates to the amortisation of goodwill under FRS10, where the
goodwill relating to the acquisition of SDL Sheffield Ltd is now being
amortised over 8 years (previously 20 years). As a consequence an additional
sum of #115,000 has been charged to the Profit & Loss account in the year.
Financial information for the 12 months ending 31 December 1998 has been
extracted from the statutory accounts which have been filed with the Registrar
of Companies. The auditor's report on those accounts was unqualified and did
not contain any statement under section 237 of the Companies Act 1985. The
audit report for the year ending 31 December 1999 has yet to be signed.
The preliminary financial statements for the year ending 31 December 1999 were
approved by the Board on 29 March 2000.
2. In the Prospectus dated 2 December 1999, the Directors forecast that
unadjusted actual turnover for the year ending 31 December 1999 would be not
less than #12,650,000 and that the unadjusted actual loss on ordinary
activities before and after taxation of the group would not be more than
#615,000 and #623,000 respectively. The financial statements indicate that the
unadjusted actual turnover amounted to #12,960,000 and the unadjusted loss
before and after taxation was #796,000 and #762,000 respectively.
The revenue benefited from the earlier commencement of a material contract
where the Company had not originally anticipated obtaining the client product
information and instructions to commence localisation until early in 2000. In
addition the Company had allowed for the anticipated effects of Y2K concerns
which in the event were not as noticeable as expected.
While the loss before taxation benefited from the earlier commencement noted
above, the final result was reduced by the effects of an adjustment to
increase the provision for potential National Insurance Contributions arising
on employee share options (see Note 8). At the time the forecast was prepared
the Company assumed a provision based on the anticipated share price at impact
date as being the best estimate of the likely price at 31 December 1999. In
the event the market price at 31 December 1999 was #4.06 against an Impact
price of #1.34. In consequence the company was required to increase its
provision to #282,000.
3. Loss per Ordinary Share
Year ended Year Ended
31 December 31 December
1999 1998
#'000 #'000
(Loss)/profit for the year before amortisation
of goodwill and provision for NIC on share options (190) 180
Goodwill amortisation (290) (71)
Provision for NIC on share options (note 8) (282) -
(Loss)/profit for the period (762) 109
Weighted average number of shares in the year:
Basic 28,919,110 26,910,153
Diluted 28,919,110 28,420,389
Basic (loss)/profit per share before
amortisation of goodwill and provision
for NIC on share options (0.66p) 0.67p
Goodwill amortisation (1.0p) (0.26p)
Provision for NIC on share options (0.97p) -
Basic (loss)/profit per share (2.63p) 0.41p
Diluted (loss)/profit per share before
amortisation Of goodwill and provision for
NIC on share options (0.66p) 0.63p
Goodwill amortisation (1.0p) (0.25p)
Provision for NIC on share options (0.97p) -
Diluted (loss)/profit per share (2.63p) 0.38p
The weighted average number of shares have been restated to reflect the 899
for 1 bonus issue in December 1999 and the consolidation from .01p shares into
1p shares at the same time.
4. Share Capital and Reserves
Share Profit & Loss
Share Capital Premium Account
#'000 #'000 #'000
At 1.1.1999 49 2,479 733
Retained loss for year - - (762)
Shares issued on flotation 337 7,909 -
Flotation charges - (529) -
Repurchase of preference shares (17) (283) (575)
At 31.12.1999 369 9,576 (604)
By special resolution passed on 1 December 1999 the shareholders resolved to
increase the share capital of the company from #55,500 to #500,000 by the
creation of an additional 4,989,500,000 share of 0.1p each. On 7 December 1999
#283,264.83p was capitalised from the amount standing to the Company's share
premium account and was distributed to the holders of .01p ordinary shares by
the allotment of 2,832,648,312 ordinary shares. Following this capitalisation
the 2,835,799,200 ordinary shares in existence were consolidated into
28,357,992 ordinary shares of 1p each.
On 7 December 1999 5,223,841 Ordinary Shares were allotted in accordance with
the placing and admission document which resulted in the listing of the
Company's shares on the London Stock Exchange.
5. Reconciliation of movements in shareholders' funds
Year ended Year Ended
31 December 31 December
1999 1998
#'000 #'000
Opening shareholders' funds 3,261 2,652
(Loss)/profit for year (762) 109
Proceeds from issue of shares 8,246 500
Flotation charges (529) -
Own share purchase (875) -
Closing shareholders' funds 9.341 3.261
6. Operating profit is stated after charging:
Year ended Year Ended
31 December 31 December
1999 1998
#'000 #'000
Research & Development Expenditure 847 662
Depreciation of owned assets 537 517
Depreciation of assets held under hire purchase 4 15
Provision for NIC on share options 282 -
Amortisation of goodwill 290 70
7. Net cash flow from operating activities
Year ended Year Ended
31 December 31 December
1999 1998
#'000 #'000
Operating (loss)/profit before interest (808) 177
Depreciation 542 532
Amortisation of Goodwill 290 71
(Profit)/loss on disposal of assets (5) -
(Increase) in Debtors (407) (104)
Increase/(Decrease) in creditors
and provisions 1,325 (58)
Net cash flow from operating
Activities 937 618
8. Future liabilities
The provision for National Insurance contributions arises on the potential
requirement for the Company to pay NIC on the exercise of certain employee
share options. From 6 April 1999 the UK Government introduced a requirement
for NIC to be due and payable by employers at the point at which employees
exercise share options granted under an unapproved share option scheme. The
gain, based on the difference between the market price at the time of exercise
and the grant price, is treated as income in the hands of the employee and the
employer is required to pay the relevant NIC. The options in question vest
over a 2 to 4 year period and are exercisable for up to 10 years from grant.
As a best estimate of the liability that the company will have to pay, the
share price at 31 December 1999 has been used. This provision will be
reviewed in the future in the light of changes in the options issued and the
movements in the share price.
Background Information
About SDL
SDL is a leading provider of globalization solutions comprising product
localisation, globalization services and development of multilingual
management applications. SDL has offices throughout USA, Asia and Europe,
providing business to business global solutions with state-of-the-art
technology and a full-range of in-house translation services. Clients include
multinational companies such as Adobe, Corel, eBay, Goodyear, Hewlett Packard,
Seagate, STAC and 3Com. SDL won the Leisureplanet contract on the basis of a
complete solution built around SDLWebFlow, together with full multilingual
translation
END
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