TIDMSDL
RNS Number : 8049H
SDL PLC
01 March 2010
1 March 2010
SDL PLC
Preliminary results for the year ended 31 December 2009
Resilience of business model and focus on innovation support strong performance
in difficult economic times
SDL plc ("SDL" or "the Group"), the leading provider of Global Information
Management (GIM) solutions, announces its unaudited preliminary results for the
year ended 31 December 2009.
+---------------------------------------+---------+---------+--------+
| | 2009 | 2008 | % |
| | GBP'000 | GBP'000 | Change |
+---------------------------------------+---------+---------+--------+
| Income Statement: | | | |
+---------------------------------------+---------+---------+--------+
| Revenue | 171,878 | 158,775 | +8 |
+---------------------------------------+---------+---------+--------+
| | | | |
+---------------------------------------+---------+---------+--------+
| Profit before tax and amortisation of | 29,821 | 25,593 | +17 |
| intangibles | | | |
+---------------------------------------+---------+---------+--------+
| Profit before tax | 24,013 | 19,850 | +21 |
+---------------------------------------+---------+---------+--------+
| | | | |
+---------------------------------------+---------+---------+--------+
| Earnings per ordinary share - basic | 23.55 | 19.21 | +23 |
| (pence) | | | |
+---------------------------------------+---------+---------+--------+
| Adjusted earnings per ordinary share | 29.05 | 24.99 | +16 |
| - basic (pence) | | | |
+---------------------------------------+---------+---------+--------+
| | | | |
+---------------------------------------+---------+---------+--------+
| Balance Sheet: | | | |
+---------------------------------------+---------+---------+--------+
| Total equity | 173,105 | 163,029 | +6 |
+---------------------------------------+---------+---------+--------+
| Cash and cash equivalents | 46,160 | 31,227 | +48 |
+---------------------------------------+---------+---------+--------+
| Interest bearing loans and borrowings | - | - | - |
+---------------------------------------+---------+---------+--------+
Operational highlights
- A record year for sales and PBTA in a difficult economy
- New customers include Continental Airlines, Shell, Ford Motor Company, the
United Nations, and LG
- Continued focus on technological innovation with increased R&D investment
- 2 new product launches
- 2 strategic acquisitions strengthen market positioning:
o XyEnterprise in structured content management
o Fredhopper in online eCommerce
- Strongly cash generative
- Demand stabilisation in Q4 2009
- Pipeline building and acceleration in cross-leveraging
Mark Lancaster, Chairman and Chief Executive of SDL, commented:
"I am delighted to report another year of record revenue and operating profit
delivery by SDL, demonstrating the resilience of our business model in the
difficult global economic conditions experienced in 2009."
"2009 was an excellent year for SDL. We increased our investment in innovation
through both increased investment in research and development, delivering two
major product releases, together with two significant strategic acquisitions.
The acquisition of XyEnterprise makes SDL a leader in structured content
management and the acquisition of Fredhopper gave us a best of breed solution in
online eCommerce."
"We exit 2009 pleased that we have delivered in a difficult global economy and
convinced that we have a suite of technologies and services that really is world
class. Penetration of the web and globalization of trade will continue to drive
the needs of major corporations to engage with their customers effectively in
multiple languages. Providing solutions that allow organisations to acquire new
customers and increase the satisfaction and intimacy for existing customers is
at the core of the SDL proposition to our clients. We now truly have end to end
solutions based on an open scalable platform that is industry leading."
"Given the excellent cash generation we anticipate paying our first dividend
for the 2010 financial year. This will not alter the Board's strategy of
pursuing strong growth, but will provide a return to those investors that value
income as well as growth."
"We believe the business is well positioned for future growth. We are very
pleased with the results of active cross leveraging of our business units as we
see an increased demand from clients adopting multiple SDL solutions. Our net
cash position of GBP46.2 million positions us well and gives considerable
financial stability and flexibility."
For further information please contact:
+------------------------------------------+---------------------+
| SDL plc | Tel: 01628 410 127 |
+------------------------------------------+---------------------+
| Mark Lancaster, Chief Executive | |
| John Hunter, Finance Director | |
+------------------------------------------+---------------------+
| | |
+------------------------------------------+---------------------+
| Financial Dynamics | Tel: 020 7831 3113 |
+------------------------------------------+---------------------+
| Juliet Clarke / Ed Bridges | |
+------------------------------------------+---------------------+
About SDL
SDL is the leader in Global Information Management solutions, which provide
increased business agility to enterprises by accelerating the delivery of
high-quality multilingual content to global markets. The company's integrated
Web Content Management, eCommerce, Structured Content and Language Technologies,
combined with its Language Services drive down the cost of content creation,
management, translation and publishing. SDL solutions increase conversion ratios
and customer satisfaction through targeted information that reaches multiple
audiences around the world through different channels.
Global industry leaders who rely on SDL include ABN-Amro, Bosch, Canon, FIAT,
FICO, Google, Hewlett-Packard, KLM, Microsoft, NetApp, Philips, SAP, Sony and
Virgin Atlantic. SDL has over 1000 enterprise customers, and provides access to
on-demand portals for 10 million customers per month. It has a global
infrastructure of more than 50 offices in 32 countries. For more information,
visit www.sdl.com.
Chairman's Statement
Summary Performance
I am delighted to report another year of record revenue and operating profit
delivery by SDL, demonstrating the resilience of our business model in the
difficult global economic conditions experienced in 2009.
2009 was an excellent year for SDL. We increased our investment in innovation
through both increased investment in research and development, delivering two
major product releases, together with two significant strategic acquisitions.
The acquisition of XyEnterprise makes SDL a leader in structured content
management and the acquisition of Fredhopper gave us a best of breed solution in
online eCommerce. Two new members were welcomed to the Board, significantly
strengthening our independent non-executive director pool and we welcomed Alan
Sloan to the executive management team as CEO of the Language Technologies
division.
Revenue for 2009 was GBP171.9 million (2008: GBP158.8 million). Profits before
taxation and amortisation of intangible assets ("PBTA") for the period was
GBP29.8 million (2008: GBP25.6 million) with profit before taxation of GBP24.0
million (2008: GBP19.9 million). Net cash in the business at the end of the
period was GBP46.2 million (2008: GBP31.2 million) after spending GBP14.2
million on acquisitions during the year.
This year, given the significant expansion of the business into the content
management arena, we are reporting our performance in three operating segments -
Content Management Technologies, Language Technologies and Language Services.
This provides increased transparency that we anticipate will be useful to our
investors.
All three of our operating segments delivered positive headline revenue growth
in 2009, and at group level the 8% revenue growth comprised 14% from currency
and 2% from the inclusion of Idiom and XyEnterprise not in prior year
comparables, with constant currency decline of 8%. We saw significant
improvement in our pipeline in the latter part of 2009 both in our Language
Services and Technologies businesses. As a result in the fourth quarter we grew
our revenue by 10% at constant currency from the previous quarter, excluding
acquisitions. It is encouraging to see a relative strengthening of the demand
environment and this, combined with driving collaboration and operational
efficiency across our business puts us in very good shape for any recovery in
the economy. We have made excellent progress integrating XyEnterprise into the
SDL Group, with 40% of the new name customers buying other SDL solutions.
We have again increased our operating cash flow which we have done consistently
year on year and our business retains its strong cash conversion
characteristics. Cash flow from operations stood at GBP30.1 million (2008:
GBP26.4 million). We ended the year with GBP46.2 million of cash and no external
debt which gives us considerable flexibility and security to pursue acquisitions
and future growth opportunities. Sound progress has been made in the control of
receivables and robust mechanisms are in place to make appropriate expenditure
choices, realising efficiencies in some areas of our operation whilst continuing
to grow expenditures on items that generate future growth such as R&D. Given the
excellent cash generation we anticipate paying our first dividend for the 2010
financial year. This will not alter the Board's strategy of pursuing strong
growth, but will provide a return to those investors that value income as well
as growth.
Content Management Technologies (contributing GBP33.2 million or 19% revenue to
the Group and GBP6.4 million or 22% of the PBTA) (2008: contributing GBP25.1
million or 16% revenue to the Group and GBP3.4 million or 13% of the PBTA)
Overall revenue in this segment grew by 32%, 13% due to acquisition, 13% due to
foreign exchange and 6% growth at constant currency. This is a particularly
pleasing performance given that the integration of a newly acquired business was
managed during the current year. This gives us strong encouragement for the
future.
SDL Web Content Management Solutions performed well, with excellent progress
made in building the business in North America given our strong strategic focus
on this region. In addition a significant new product release was implemented
during the year. This new product, SDL Tridion 2009, is a unified marketing
suite providing a complete end-to-end solution for customer engagement.
The integration of XyEnterprise has progressed very well with the Structured
Content Technologies products, formally XyEnterprise and Trisoft, offered on a
global basis across the client base. Feedback from the market underscores that
the combination of these businesses creates an industry leader in XML publishing
and component content management and the business is well positioned for the
future.
Some of the new clients that invested in content management technology included
Informatica, Linde, Hewlett Packard, Chevron Corporation, Nexway and NetApp.
Language Technologies (contributing GBP29.1 million or 17% revenue to the Group
and GBP3.5 million or 12% of the PBTA) (2008: contributing GBP27.6 million or
17% revenue to the Group and GBP3.5 million or 14% of the PBTA)
Overall headline sales growth was 6% in the language technologies business of
which 15% was due to currency, 1% due to acquisition, with a constant currency
sales decline of 10%.
The Language Technologies business proved resilient to global economic
conditions. Whilst enterprise licence revenue in Europe declined as anticipated,
licence revenue actually grew in North America and Asia. An increasing number of
clients invested in language technology in 2009 such as LG, Ford Motor Company,
the UN and Cisco. It is very pleasing to see many more new customers adopting
multiple SDL solutions across their business. Support and maintenance revenue
remained very robust in 2009.
We continue to invest in building our language technology business and shipped
our new translator's desktop product in June - SDL Trados Studio 2009 is
bringing new ways of working and productivity benefits to freelance translators.
Sales of this product have started to accelerate towards the end of 2009. We are
seeing a significant increase in our SDL Trados Studio technology revenue in
China based on an increasing desire to manage content in multiple languages in a
structured way.
Language Services (contributing GBP109.6 million or 64% of group revenue and
GBP19.8 million or 66% of PBTA). (2008: contributing GBP106.1 million or 67% of
group revenue and GBP18.7 million or 73% of PBTA).
In the Language Services segment, overall revenues grew by 3% in 2009 with 14%
attributable to currency and down 11% in constant currency. The demand
environment has recovered in the second half of 2009 with activity increasing in
some parts of our business supplemented by an encouraging set of recent wins
which are consolidating into the revenue base. New wins include American Heart
Association, Inverness Medical Innovations Inc, Microfocus, Continental Airlines
and Shell. The profitability of the business continues to improve demonstrating
significant resilience to the economy. Considerable effort has been put into our
sourcing strategy and process efficiencies throughout the global network by
utilizing SDL's technology. We invested in machine translation in 2004 and are
now the market leaders in integrating human and machine translation into the
complex process of translation. These investments have equipped us well to
manage the fast moving language translation market place to maximise margins.
Our Vision and Strategy for Global Information Management
We exit 2009 pleased that we have delivered in a difficult global economy and
convinced that we have a suite of technologies and services that really is world
class. Penetration of the web and globalization of trade will continue to drive
the needs of major corporations to engage with their customers effectively in
multiple languages. Providing solutions that allow organisations to acquire new
customers and increase the satisfaction and intimacy for existing customers is
at the core of the SDL proposition to our clients. We now truly have end-to-end
solutions based on an open scalable platform that is industry leading.
We continue to see trends in content and media moving online and the increased
requirements for local language and these trends play well into our Global
Information Management Strategy. The Fredhopper acquisition gives us a leading
position in the exciting world of online retail ecommerce, which we believe will
grow rapidly as the 'internet born' generation move into industry and become
important decision makers. Our acquisition of Trisoft, and more recently
XyEnterprise, provide businesses with the capability to create, manage and share
structured content from user manuals to support knowledge bases.
When our web content management, structured content management and translation
management technologies are used in concert, we are able to give companies
considerable time-to-market advantages, brand consistency and cost advantages
for content across their enterprise. The tangible evidence for this is the
adoption of multiple solutions from SDL across a number of our major global
clients such as HP, Canon, Intel, Dell, Informatica, Renault, Case New Holland
and AGCO and many more. In fact in 2009, 42 of the top 50 global brands use SDL
solutions to help them maximise revenues.
Industry analysts such as Forrester and Gartner are giving increasing focus to
the management of content in multiple languages and we are therefore confident
that we have the right strategy and we will see increasing adoption of Global
Information Management strategies in 2010.
Outlook and current trading
Our business has demonstrated considerable resilience to the global economy in
2009 and despite seeing continued fragility in some sections of the economy we
have seen stabilization and subsequently some recovery in activity levels and
demand.
We believe the business is well positioned for future growth. We are very
pleased with the results of active cross leveraging of our business units as we
see an increased demand from clients adopting multiple SDL solutions. Our net
cash position of GBP46.2 million positions us well and gives considerable
financial stability and flexibility.
We are confident in our growth prospects and with our strategy, vision and
committed leadership team, we believe the business continues to offer an
excellent opportunity for long term value creation and profitable growth.
Mark Lancaster
Chairman
SDL plc
UNAUDITED Consolidated INCOME STATEMENT
for the year ended 31 December 2009
+--------------------------------------+-------+----------+----------+
| | Notes | 2009 | 2008 |
+--------------------------------------+-------+----------+----------+
| | | GBP000 | GBP000 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Sale of goods | | 25,363 | 24,102 |
+--------------------------------------+-------+----------+----------+
| Rendering of services | | 146,515 | 134,673 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| REVENUE | 3 | 171,878 | 158,775 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Cost of sales | | (76,387) | (71,884) |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| GROSS PROFIT | | 95,491 | 86,891 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Administrative expenses - excluding | 4 | (66,096) | (61,298) |
| amortisation of intangibles | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Operating profit before amortisation | | 29,395 | 25,593 |
| of intangible assets | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Administration expenses - | 4 | (5,808) | (5,743) |
| amortisation of intangible assets | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Operating profit | 4 | 23,587 | 19,850 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Finance revenue | | 426 | 471 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Finance costs | | - | (462) |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Share of loss of associate | | - | (9) |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| PROFIT BEFORE TAX | | 24,013 | 19,850 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Tax expense | 5 | (6,060) | (5,310) |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| PROFIT for the YEAR | | 17,953 | 14,540 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Profit for the year attributable to | | 17,944 | 14,485 |
| equity holders of the parent | | | |
+--------------------------------------+-------+----------+----------+
| Minority interest | | 9 | 55 |
+--------------------------------------+-------+----------+----------+
| | | 17,953 | 14,540 |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Earnings per ordinary share - basic | 6 | 23.55 | 19.21 |
| (pence) | | | |
+--------------------------------------+-------+----------+----------+
| Earnings per ordinary share - | 6 | 22.79 | 18.75 |
| diluted (pence) | | | |
+--------------------------------------+-------+----------+----------+
| | | | |
+--------------------------------------+-------+----------+----------+
| Adjusted earnings per ordinary share | 6 | 29.05 | 24.99 |
| - basic (pence) | | | |
+--------------------------------------+-------+----------+----------+
| Adjusted earnings per ordinary share | 6 | 28.11 | 24.38 |
| - diluted (pence) | | | |
+--------------------------------------+-------+----------+----------+
SDL plc
UNAUDITED Consolidated STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2009
+-------------------------------------+-------+----------+---------+
| |Notes | 2009 | 2008 |
+-------------------------------------+-------+----------+---------+
| | | GBP'000 | GBP'000 |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| Profit for the period | | 17,953 | 14,540 |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| Currency translation differences on | | (13,549) | 36,527 |
| foreign operations | | | |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| Currency translation differences on | | 2,255 | (2,311) |
| foreign currency equity loans to | | | |
| foreign subsidiaries | | | |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| Income tax benefit on currency | 5 | 847 | - |
| translation differences on foreign | | | |
| currency equity loans to foreign | | | |
| subsidiaries | | | |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| OTHER COMPREHENSIVE INCOME | | (10,447) | 34,216 |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| TOTAL COMPREHENSIVE INCOME | | 7,506 | 48,756 |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| Attributable to: | | | |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| Equity holders of the parent | | 7,497 | 48,701 |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| Minority interests | | 9 | 55 |
+-------------------------------------+-------+----------+---------+
| | | | |
+-------------------------------------+-------+----------+---------+
| | | 7,506 | 48,756 |
+-------------------------------------+-------+----------+---------+
SDL plc
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2009
+-------------------------------------+-------+----------+----------+
| |Notes | 2009 | 2008 |
+-------------------------------------+-------+----------+----------+
| | | GBP'000 | GBP'000 |
+-------------------------------------+-------+----------+----------+
| ASSETS | | | |
+-------------------------------------+-------+----------+----------+
| NON CURRENT ASSETS | | | |
+-------------------------------------+-------+----------+----------+
| Property, plant and equipment | | 5,005 | 4,524 |
+-------------------------------------+-------+----------+----------+
| Intangible assets | 7 | 137,624 | 138,225 |
+-------------------------------------+-------+----------+----------+
| Investment in an associate | | - | - |
+-------------------------------------+-------+----------+----------+
| Deferred tax asset | | 5,621 | 6,455 |
+-------------------------------------+-------+----------+----------+
| Rent deposits | | 819 | 641 |
+-------------------------------------+-------+----------+----------+
| | | 149,069 | 149,845 |
+-------------------------------------+-------+----------+----------+
| CURRENT ASSETS | | | |
+-------------------------------------+-------+----------+----------+
| Trade and other receivables | | 40,456 | 45,098 |
+-------------------------------------+-------+----------+----------+
| Cash and cash equivalents | 9 | 46,160 | 31,227 |
+-------------------------------------+-------+----------+----------+
| | | 86,616 | 76,325 |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| TOTAL ASSETS | | 235,685 | 226,170 |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| CURRENT LIABILITIES | | | |
+-------------------------------------+-------+----------+----------+
| Trade and other payables | | (45,504) | (43,527) |
+-------------------------------------+-------+----------+----------+
| Financial liabilities | | - | (2,016) |
+-------------------------------------+-------+----------+----------+
| Current tax liabilities | | (6,794) | (8,252) |
+-------------------------------------+-------+----------+----------+
| Provisions | | (1,102) | (38) |
+-------------------------------------+-------+----------+----------+
| | | (53,400) | (53,833) |
+-------------------------------------+-------+----------+----------+
| NON CURRENT LIABILITIES | | | |
+-------------------------------------+-------+----------+----------+
| Other payables | | (65) | (124) |
+-------------------------------------+-------+----------+----------+
| Deferred tax liability | | (7,298) | (8,100) |
+-------------------------------------+-------+----------+----------+
| Provisions | | (1,817) | (1,084) |
+-------------------------------------+-------+----------+----------+
| | | (9,180) | (9,308) |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| TOTAL LIABILITIES | | (62,580) | (63,141) |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| NET ASSETS | | 173,105 | 163,029 |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| EQUITY | | | |
+-------------------------------------+-------+----------+----------+
| Share capital | | 770 | 757 |
+-------------------------------------+-------+----------+----------+
| Share premium account | | 93,207 | 92,483 |
+-------------------------------------+-------+----------+----------+
| Shares to be issued | | 203 | 406 |
+-------------------------------------+-------+----------+----------+
| Retained earnings | | 50,218 | 30,250 |
+-------------------------------------+-------+----------+----------+
| Foreign exchange differences | | 28,707 | 39,154 |
+-------------------------------------+-------+----------+----------+
| TOTAL EQUITY ATTRIBUTABLE TO EQUITY | | 173,105 | 163,050 |
| HOLDERS OF THE PARENT | | | |
+-------------------------------------+-------+----------+----------+
| Minority interest | | - | (21) |
+-------------------------------------+-------+----------+----------+
| TOTAL EQUITY | | 173,105 | 163,029 |
+-------------------------------------+-------+----------+----------+
SDL plc
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2009
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| | | Share | Shares | Retained | Foreign | Minority | |
| | Share | Premium | to be | Earnings | Exchange | Interest | |
| | Capital | Account | Issued | | Differences | | Total |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| At 1 January | 750 | 91,866 | 541 | 14,921 | 4,938 | - | 113,016 |
| 2008 | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| Profit for the | - | - | - | 14,485 | - | 55 | 14,540 |
| period | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| Other | - | - | - | - | 34,216 | - | 34,216 |
| comprehensive | | | | | | | |
| income | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| Total | - | - | - | 14,485 | 34,216 | 55 | 48,756 |
| comprehensive | | | | | | | |
| income | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| Deferred | - | - | - | (1,041) | - | - | (1,041) |
| income | | | | | | | |
| taxation on | | | | | | | |
| share based | | | | | | | |
| payments (Note | | | | | | | |
| 5) | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| Tax credit for | - | - | - | 494 | - | - | 494 |
| share options | | | | | | | |
| (Note 5) | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| Arising on | 7 | 482 | - | - | - | - | 489 |
| share issues | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| Arising on | - | - | - | - | - | (76) | (76) |
| acquisition of | | | | | | | |
| Trisoft | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| Arising on | - | 135 | (135) | - | - | - | - |
| acquisition of | | | | | | | |
| Passolo | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| Share based | - | - | - | 1,391 | - | - | 1,391 |
| payments (Note | | | | | | | |
| 8) | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
| At 31 December | 757 | 92,483 | 406 | 30,250 | 39,154 | (21) | 163,029 |
| 2008 | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+---------+
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| | | Share | Shares | Retained | Foreign | Minority | |
| | Share | Premium | to be | Earnings | Exchange | Interest | |
| | Capital | Account | Issued | | Differences | | Total |
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| At 1 January | 757 | 92,483 | 406 | 30,250 | 39,154 | (21) | 163,029 |
| 2009 | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Profit for the | - | - | - | 17,944 | - | 9 | 17,953 |
| period | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Other | - | - | - | - | (10,447) | - | (10,447) |
| comprehensive | | | | | | | |
| income | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Total | - | - | - | 17,944 | (10,447) | 9 | 7,506 |
| comprehensive | | | | | | | |
| income | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Deferred | - | - | - | (220) | - | - | (220) |
| income | | | | | | | |
| taxation on | | | | | | | |
| share based | | | | | | | |
| payments (Note | | | | | | | |
| 5) | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Tax credit for | - | - | - | 635 | - | - | 635 |
| share options | | | | | | | |
| (Note 5) | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Arising on | 13 | 533 | - | - | - | - | 546 |
| share issues | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Arising on | - | (12) | - | - | - | - | (12) |
| share | | | | | | | |
| cancellation | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Arising on | - | - | - | - | - | 12 | 12 |
| acquisition of | | | | | | | |
| Trisoft | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Arising on | - | 203 | (203) | - | - | - | - |
| acquisition of | | | | | | | |
| Passolo | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| Share based | - | - | - | 1,609 | - | - | 1,609 |
| payments (Note | | | | | | | |
| 8) | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
| At 31 December | 770 | 93,207 | 203 | 50,218 | 28,707 | - | 173,105 |
| 2009 | | | | | | | |
+----------------+---------+---------+---------+----------+-------------+----------+----------+
SDL plc
UNAUDITED consolidated STATEMENT OF CASH FLOWS
for the year ended 31 December 2009
+-------------------------------------+-------+----------+----------+
| |Notes | 2009 | 2008 |
+-------------------------------------+-------+----------+----------+
| | | GBP'000 | GBP'000 |
+-------------------------------------+-------+----------+----------+
| PROFIT BEFORE TAX | | 24,013 | 19,850 |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| Depreciation of property, plant and | | 1,980 | 1,630 |
| equipment | | | |
+-------------------------------------+-------+----------+----------+
| Amortisation of intangible assets | 7 | 5,808 | 5,743 |
+-------------------------------------+-------+----------+----------+
| Finance revenue | | (353) | (471) |
+-------------------------------------+-------+----------+----------+
| Finance costs | | - | 462 |
+-------------------------------------+-------+----------+----------+
| Share of loss of associate | | - | 9 |
+-------------------------------------+-------+----------+----------+
| Share based payments | | 1,609 | 1,391 |
+-------------------------------------+-------+----------+----------+
| Loss on disposal of property, plant | | - | - |
| & equipment | | | |
+-------------------------------------+-------+----------+----------+
| Decrease / (increase) in trade and | | 6,997 | (8,565) |
| other receivables | | | |
+-------------------------------------+-------+----------+----------+
| (Decrease) / increase in trade and | | (3,981) | 9,723 |
| other payables | | | |
+-------------------------------------+-------+----------+----------+
| Exchange differences | | 587 | 1,271 |
+-------------------------------------+-------+----------+----------+
| CASH GENERATED FROM OPERATIONS | | 36,660 | 31,043 |
+-------------------------------------+-------+----------+----------+
| Income tax paid | | (6,584) | (4,647) |
+-------------------------------------+-------+----------+----------+
| NET CASH FLOWS FROM OPERATING | | 30,076 | 26,396 |
| ACTIVITIES | | | |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| CASH FLOWS FROM INVESTING | | | |
| ACTIVITIES | | | |
+-------------------------------------+-------+----------+----------+
| Payments to acquire property, plant | | (1,286) | (2,323) |
| & equipment | | | |
+-------------------------------------+-------+----------+----------+
| Receipts from sale of property, | | 108 | 78 |
| plant & equipment | | | |
+-------------------------------------+-------+----------+----------+
| Payments to acquire subsidiaries | | (14,182) | (13,662) |
+-------------------------------------+-------+----------+----------+
| Net cash acquired with subsidiaries | | 1,427 | 343 |
+-------------------------------------+-------+----------+----------+
| Interest received | | 353 | 471 |
+-------------------------------------+-------+----------+----------+
| NET CASH FLOWS FROM INVESTING | | (13,580) | (15,093) |
| ACTIVITIES | | | |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| CASH FLOWS FROM FINANCING | | | |
| ACTIVITIES | | | |
+-------------------------------------+-------+----------+----------+
| Net proceeds from issue of ordinary | | 535 | 489 |
| share capital | | | |
+-------------------------------------+-------+----------+----------+
| Repayment of interest bearing loans | 9 | - | (17,555) |
| and borrowings | | | |
+-------------------------------------+-------+----------+----------+
| Proceeds from new loans | 9 | - | 9,500 |
+-------------------------------------+-------+----------+----------+
| Interest paid | | - | (462) |
+-------------------------------------+-------+----------+----------+
| NET CASH FLOWS FROM FINANCING | | 535 | (8,028) |
| ACTIVITIES | | | |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| INCREASE IN CASH AND CASH | | 17,031 | 3,275 |
| EQUIVALENTS | | | |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| MOVEMENT IN CASH AND CASH | | | |
| EQUIVALENTS | | | |
+-------------------------------------+-------+----------+----------+
| | | | |
+-------------------------------------+-------+----------+----------+
| Cash and cash equivalents at the | | 31,227 | 21,511 |
| start of year | | | |
+-------------------------------------+-------+----------+----------+
| Increase in cash and cash | 9 | 17,031 | 3,275 |
| equivalents | | | |
+-------------------------------------+-------+----------+----------+
| Effect of exchange rates on cash | 9 | (2,098) | 6,441 |
| and cash equivalents | | | |
+-------------------------------------+-------+----------+----------+
| NET CASH AND CASH EQUIVALENTS AT | 9 | 46,160 | 31,227 |
| END OF YEAR | | | |
+-------------------------------------+-------+----------+----------+
SDL plc
notes to the unaudited financial statements
1. BASIS OF ACCOUNTING
Basis of preparation
These preliminary financial statements do not constitute statutory accounts
within the meaning of section 435 of the Companies Act 2006 and are unaudited.
The financial statements for the year ended 31 December 2009 have yet to be
signed by the auditors.
The consolidated financial statements of SDL plc and its subsidiaries have been
prepared in accordance with International Financial Reporting Standards as
adopted by the EU as relevant to the financial statements of SDL plc.
Significant accounting policies
The accounting policies adopted in the preparation of the condensed consolidated
financial statements are consistent with those followed in preparation of the
Group's annual financial statements for the year ended 31 December 2008, except
for the adoption of new Standards and Interpretations as of 1 January 2009,
noted below:
IAS 1 Revised Presentation of Financial Statements
The revised Standard separates owner and non-owner changes in equity. The
statement of changes in equity includes only details of transactions with
owners, with non-owner changes in equity presented as a single line. In
addition, the Standard introduces the statement of comprehensive income which
presents all items of recognised income and expense, either in one single
statement, or in two linked statements. The Group has elected to present two
linked statements.
IFRS 8 Operating Segments
This Standard requires disclosure of information about the Group's operating
segments and replaces the requirement to determine primary (business) and
secondary (geographical) reporting segments of the Group. Adoption of this
Standard did not have any effect on the financial position or performance of the
Group. The Group determined that the operating segments should be expanded to
three following the acquisition of XyEnterprise Inc growing the Content
Management segment. Additional disclosures about each of these segments are
shown in Note 3, including revised comparative information.
IFRS 2 Share-based Payment - Vesting Conditions and Cancellations
The Standard has been amended to clarify the definition of vesting conditions
and to prescribe the accounting treatment of an award that is effectively
cancelled because of a non-vesting condition is not satisfied. The adoption of
this amendment did not have any impact on the financial position or performance
of the Group.
2. BUSINESS COMBINATIONS
Acquisition of Trisoft NV
On 24 April 2009 the Group acquired the remaining 5% of the voting rights of
Trisoft NV (a company based in Belgium) taking its ownership to 100%. Cash
consideration of GBP190,400 was paid. The book value of the net liabilities of
Trisoft at this date were GBP202,000. The difference between the consideration
and the book value of the interest acquired has been recognised as goodwill.
Acquisition of XyEnterprise Inc
On 26 June 2009 the Group acquired 100% of the share capital of XyEnterprise
Inc, an unlisted company based in the United States of America. The principal
activity of XyEnterprise Inc is the provision of XML Component Content
Management (CCM) and Dynamic Publishing solutions.
The total cost of the combination was $14.8 million (GBP9.0 million) and was
funded from the Group's existing cash resources.
The fair value of the identifiable assets and liabilities of XyEnterprise Inc as
at the date of acquisition were:
+-----------------------------+---------+---------+
| | Book | Fair |
| | value | value |
| | | to |
| | | Group |
+-----------------------------+---------+---------+
| | | |
+-----------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+-----------------------------+---------+---------+
| Intangible assets | - | 3,279 |
+-----------------------------+---------+---------+
| Property, plant and | 338 | 338 |
| equipment | | |
+-----------------------------+---------+---------+
| Cash and cash equivalents | 1,287 | 1,287 |
+-----------------------------+---------+---------+
| Trade receivables | 1,016 | 1,016 |
+-----------------------------+---------+---------+
| Other receivables | 469 | 469 |
+-----------------------------+---------+---------+
| Trade payables | (68) | (68) |
+-----------------------------+---------+---------+
| Other payables | (3,283) | (3,283) |
+-----------------------------+---------+---------+
| Deferred tax assets | 679 | 679 |
+-----------------------------+---------+---------+
| Deferred tax liabilities | - | (918) |
+-----------------------------+---------+---------+
| Net assets | 438 | 2,799 |
+-----------------------------+---------+---------+
| Goodwill arising on | | 6,170 |
| acquisition | | |
+-----------------------------+---------+---------+
| | | 8,969 |
+-----------------------------+---------+---------+
| | | |
| | | |
| Discharged by: | | GBP'000 |
+-----------------------------+---------+---------+
| | | |
+-----------------------------+---------+---------+
| Costs associated with the | | 83 |
| acquisition | | |
+-----------------------------+---------+---------+
| Cash paid to shareholders | | 8,886 |
+-----------------------------+---------+---------+
| Total cash paid | | 8,969 |
+-----------------------------+---------+---------+
| | | |
+-----------------------------+---------+---------+
| Cash outflow on the | | |
| acquisition: | | |
+-----------------------------+---------+---------+
| Net cash and cash | | 1,287 |
| equivalents acquired with | | |
| the subsidiary | | |
+-----------------------------+---------+---------+
| Total cash paid | | (8,969) |
+-----------------------------+---------+---------+
| Net cash outflow | | (7,682) |
+-----------------------------+---------+---------+
| | | |
+-----------------------------+---------+---------+
From the date of acquisition XyEnterprise Inc has contributed GBP3.2 million of
revenue and a profit of GBP0.2 million to the net profit after tax of the Group.
If the combination had taken place at the beginning of the year, the profit
after tax for the Group would have been GBP18.0 million and revenue from
continuing operations would have been GBP175.1 million. Included in the GBP6.2
million of goodwill recognised above are certain intangible assets that cannot
be individually separated and reliably measured from the acquiree due to their
nature. These items include assembled workforce.
Acquisition of Fredhopper Group BV
On 31 December 2009 the Group acquired 100% of the share capital of Fredhopper
Group BV, an unlisted company based in the Netherlands. The principal activity
of Fredhopper Group BV is the provision of targeting and marketing software for
eCommerce.
The total cost of the combination was EUR5.6 million (GBP5.0 million) and was
funded from the Group's existing cash resources.
The provisional fair value of the identifiable assets and liabilities of
Fredhopper Group BV as at the date of acquisition were:
+-----------------------------+---------+-------------+
| | Book | Provisional |
| | value | fair value |
| | | to |
| | | Group |
+-----------------------------+---------+-------------+
| | GBP'000 | GBP'000 |
+-----------------------------+---------+-------------+
| Intangible assets | - | 1,506 |
+-----------------------------+---------+-------------+
| Property, plant and | 39 | 39 |
| equipment | | |
+-----------------------------+---------+-------------+
| Cash and cash equivalents | 141 | 141 |
+-----------------------------+---------+-------------+
| Trade receivables | 500 | 500 |
+-----------------------------+---------+-------------+
| Other receivables | 106 | 106 |
+-----------------------------+---------+-------------+
| Trade payables | (142) | (142) |
+-----------------------------+---------+-------------+
| Other payables | (1,055) | (1,055) |
+-----------------------------+---------+-------------+
| Deferred tax assets | 329 | 329 |
+-----------------------------+---------+-------------+
| Deferred tax liabilities | - | (422) |
+-----------------------------+---------+-------------+
| Net (liabilities) / assets | (82) | 1,002 |
+-----------------------------+---------+-------------+
| Goodwill arising on | | 4,021 |
| acquisition | | |
+-----------------------------+---------+-------------+
| | | 5,023 |
+-----------------------------+---------+-------------+
All fair values included in the above analysis are provisional fair values which
are based upon management's best estimate at the date of preparation of the
financial statements. The fair values are only provisional due to the proximity
of the acquisition to the date of the reporting period.
+------------------------------+--------+---------+
| Discharged by: | | GBP'000 |
+------------------------------+--------+---------+
| | | |
+------------------------------+--------+---------+
| Costs associated with the | | 48 |
| acquisition | | |
+------------------------------+--------+---------+
| Cash paid | | 4,975 |
+------------------------------+--------+---------+
| Total | | 5,023 |
+------------------------------+--------+---------+
| | | |
+------------------------------+--------+---------+
| Cash outflow on the | | |
| acquisition: | | |
+------------------------------+--------+---------+
| Net cash and cash | | 141 |
| equivalents acquired with | | |
| the subsidiary | | |
+------------------------------+--------+---------+
| Cash paid | | (5,023) |
+------------------------------+--------+---------+
| Net cash outflow | | (4,882) |
+------------------------------+--------+---------+
| | | |
+------------------------------+--------+---------+
From the date of acquisition Fredhopper Group BV has contributed GBPnil of
revenue and GBPnil to the net profit of the Group. If the combination had taken
place at the beginning of the year, the profit after tax for the Group would
have been GBP17.5 million and revenue from continuing operations would have been
GBP174.0 million. Included in the GBP4.0 million of goodwill recognised above
are certain intangible assets that cannot be individually separated and reliably
measured from the acquiree due to their nature. These items include assembled
workforce.
3. SEGMENT INFORMATION
The Group operates in the Global Information Management industry. For management
purposes the Group is organised into business units based on their products and
services and has three reportable operating segments as follows:
· The Language Services segment is the provision of a translation service
to customer's multilingual content.
· The Language Technologies segment is the sale of enterprise and desktop
technology developed to help automate and manage multilingual assets together
with associated consultancy and other services.
· The Content Management Technologies segment is the sale of content
management technology developed to help automate and manage content to deliver a
consistent, interactive and personalised customer experience, in multiple
languages, across websites, documentation and channels.
Within the Content Management Technologies segment two operating segments have
been aggregated to form the above reportable operating segment.
Management monitors the operating results of its business units separately for
the purpose of making decisions about resource allocation and performance
assessment prior to charges for tax and amortisation.
+--------------+----------+--------------+--------------+--------------+---------+
| Year ended 31 December 2009 |
+--------------------------------------------------------------------------------+
| | Language | Language | Content | Adjustments | Total |
| | Services | Technologies | Management | and | |
| | | | Technologies | eliminations | |
+--------------+----------+--------------+--------------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------+----------+--------------+--------------+--------------+---------+
| | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| External | 109,612 | 29,103 | 33,163 | - | 171,878 |
| revenue | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Internal | - | - | | - | - |
| revenue | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Total | 109,612 | 29,103 | 33,163 | - | 171,878 |
| revenue | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Depreciation | 1,142 | 346 | 492 | - | 1,980 |
+--------------+----------+--------------+--------------+--------------+---------+
| Segment | 19,842 | 3,535 | 6,444 | - | 29,821 |
| profit | | | | | |
| before tax | | | | | |
| and | | | | | |
| amortisation | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Amortisation | | | | | (5,808) |
+--------------+----------+--------------+--------------+--------------+---------+
| Profit | | | | | 24,013 |
| before tax | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
+--------------+----------+--------------+--------------+--------------+---------+
| Year ended 31 December 2008 |
+--------------------------------------------------------------------------------+
| | Language | Language | Content | Adjustments | Total |
| | Services | Technologies | Management | and | |
| | | | Technologies | eliminations | |
+--------------+----------+--------------+--------------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------+----------+--------------+--------------+--------------+---------+
| | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| External | 106,100 | 27,588 | 25,087 | - | 158,775 |
| revenue | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Internal | - | - | - | - | - |
| revenue | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Total | 106,100 | 27,588 | 25,087 | - | 158,775 |
| revenue | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Depreciation | 1,048 | 370 | 212 | - | 1,630 |
+--------------+----------+--------------+--------------+--------------+---------+
| Segment | 18,658 | 3,528 | 3,407 | - | 25,593 |
| profit | | | | | |
| before tax | | | | | |
| and | | | | | |
| amortisation | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Amortisation | | | | | (5,743) |
+--------------+----------+--------------+--------------+--------------+---------+
| Profit | | | | | 19,850 |
| before tax | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
Unallocated assets include cash, loans and taxation.
Segment assets:
+--------------+----------+--------------+--------------+--------------+---------+
| | Language | Language | Content | Adjustments | Total |
| | Services | Technologies | Management | and | |
| | | | Technologies | eliminations | |
+--------------+----------+--------------+--------------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------+----------+--------------+--------------+--------------+---------+
| Segments | | | | | |
| assets: | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| At 31 | 48,266 | 58,312 | 76,324 | (1)52,783 | 235,685 |
| December | | | | | |
| 2009 | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| At 31 | 54,103 | 70,221 | 63,603 | (2)38,243 | 226,170 |
| December | | | | | |
| 2008 | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
(1) Segment assets do not include cash (GBP46,160,000), Corporation Tax
(GBP1,002,000) and Deferred Tax (GBP5,621,000).
(2) Segment assets do not include cash (GBP31,227,000), Corporation Tax
(GBP561,000) and Deferred Tax (GBP6,455,000).
Geographical analysis of external revenues by country of domicile is as follows:
+------------------------------------------+---------+---------+
| | 2009 | 2008 |
+------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
| | | |
+------------------------------------------+---------+---------+
| UK | 51,662 | 52,329 |
+------------------------------------------+---------+---------+
| USA | 31,350 | 23,944 |
+------------------------------------------+---------+---------+
| Republic of Ireland | 22,456 | 20,376 |
+------------------------------------------+---------+---------+
| Netherlands | 11,616 | 11,606 |
+------------------------------------------+---------+---------+
| Belgium | 14,888 | 13,837 |
+------------------------------------------+---------+---------+
| Germany | 13,146 | 11,958 |
+------------------------------------------+---------+---------+
| Canada | 10,541 | 11,157 |
+------------------------------------------+---------+---------+
| Rest of World | 16,219 | 13,568 |
+------------------------------------------+---------+---------+
| | 171,878 | 158,775 |
+------------------------------------------+---------+---------+
Geographical analysis of non-current assets excluding deferred tax is as
follows:
+------------------------------------------+---------+---------+
| | 2009 | 2008 |
+------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
| | | |
+------------------------------------------+---------+---------+
| UK | 129,138 | 139,327 |
+------------------------------------------+---------+---------+
| USA | 11,442 | 573 |
+------------------------------------------+---------+---------+
| Rest of World | 2,868 | 3,490 |
+------------------------------------------+---------+---------+
| | 143,448 | 143,390 |
+------------------------------------------+---------+---------+
Goodwill and intangibles recognised on consolidation are included in the country
which initially acquired the business giving rise to the recognition of goodwill
and intangibles.
4. OTHER REVENUE AND EXPENSES
Group operating profit is stated after charging/(crediting):
+------------------------------------------+---------+---------+
| | 2009 | 2008 |
+------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| Included in administrative expenses: | | |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| Research and development expenditure | 11,043 | 8,044 |
+------------------------------------------+---------+---------+
| Bad debt (credit)/ charge | (374) | 460 |
+------------------------------------------+---------+---------+
| Depreciation of property, plant and | 1,980 | 1,630 |
| equipment | | |
+------------------------------------------+---------+---------+
| Amortisation of intangible assets | 5,808 | 5,743 |
+------------------------------------------+---------+---------+
| Operating lease rentals for plant and | 912 | 763 |
| machinery | | |
+------------------------------------------+---------+---------+
| Operating lease rentals for land and | 5,636 | 4,953 |
| buildings | | |
+------------------------------------------+---------+---------+
| Operating lease rentals received for | (75) | (150) |
| land and buildings | | |
+------------------------------------------+---------+---------+
| Net foreign exchange losses/ (gains) | 838 | (764) |
+------------------------------------------+---------+---------+
| (Gain)/ loss on derivatives | (352) | 3,764 |
+------------------------------------------+---------+---------+
The net foreign exchange (gains) / losses above arose due to movements in
foreign currencies between the time of the original transaction and the
realisation of the cash collection or spend, and the retranslation of US Dollar
and Euro denominated loans.
5. INCOME TAX
(a) Income tax on profit:
Consolidated income statement
+------------------------------------------+---------+---------+
| | 2009 | 2008 |
| | GBP'000 | GBP'000 |
+------------------------------------------+---------+---------+
| Current taxation | | |
+------------------------------------------+---------+---------+
| UK Income tax charge | | |
+------------------------------------------+---------+---------+
| Current tax on income for the period | 1,755 | 1,758 |
+------------------------------------------+---------+---------+
| Adjustments in respect of prior periods | - | (122) |
+------------------------------------------+---------+---------+
| | 1,755 | 1,636 |
+------------------------------------------+---------+---------+
| Foreign tax | | |
+------------------------------------------+---------+---------+
| Current tax on income for the period | 4,714 | 4,247 |
+------------------------------------------+---------+---------+
| Adjustments in respect of prior periods | 123 | 58 |
+------------------------------------------+---------+---------+
| | 4,837 | 4,305 |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| Total current taxation | 6,592 | 5,941 |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| Deferred income taxation | | |
+------------------------------------------+---------+---------+
| Origination and reversal of temporary | (532) | (554) |
| differences | | |
+------------------------------------------+---------+---------+
| Adjustments in respect of prior periods | - | (77) |
+------------------------------------------+---------+---------+
| Total deferred income tax | (532) | (631) |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| Tax expense (see (b) below) | 6,060 | 5,310 |
+------------------------------------------+---------+---------+
Consolidated statement of other comprehensive income
+------------------------------------------+---------+---------+
| | 2009 | 2008 |
| | GBP'000 | GBP'000 |
+------------------------------------------+---------+---------+
| Current taxation | | |
+------------------------------------------+---------+---------+
| UK Income tax | | |
+------------------------------------------+---------+---------+
| Adjustment in respect of prior periods: | 847 | - |
| Income tax benefit on currency | | |
| translation differences on foreign | | |
| currency equity loans to foreign | | |
| subsidiaries | | |
+------------------------------------------+---------+---------+
| Total current taxation | 847 | - |
+------------------------------------------+---------+---------+
A tax credit in respect of share based compensation for current taxation of
GBP635,000 (2008: credit of GBP494,000) has been recognised in the statement of
changes in equity in the year. A tax debit in respect of share based
compensation for deferred taxation of GBP220,000 (2008: debit of GBP1,041,000)
has been recognised in the statement of changes in equity in the year.
(b) Factors affecting tax charge:
The tax assessed on the profit on ordinary activities for the year is lower than
the standard rate of income tax in the UK of 28% (2008: 28.5%). The differences
are reconciled below:
+------------------------------------------+---------+---------+
| | 2009 | 2008 |
| | GBP'000 | GBP'000 |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| Profit on ordinary activities before tax | 24,013 | 19,850 |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| Profit on ordinary activities at | 6,724 | 5,657 |
| standard rate of tax in the UK 28% | | |
| (2008: 28.5%) | | |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| Expenses not deductible for tax purposes | 191 | 22 |
+------------------------------------------+---------+---------+
| Non deductible amortisation of | - | 220 |
| intangibles | | |
+------------------------------------------+---------+---------+
| Non taxable income | - | (217) |
+------------------------------------------+---------+---------+
| Adjustments in respect of previous years | 123 | (141) |
+------------------------------------------+---------+---------+
| Utilisation of tax losses brought | (521) | (308) |
| forward previously not recognised | | |
+------------------------------------------+---------+---------+
| Current tax losses not available for | 147 | 631 |
| offset | | |
+------------------------------------------+---------+---------+
| Effect of overseas tax rates | (532) | (894) |
+------------------------------------------+---------+---------+
| Other | (72) | 340 |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
| Tax expense (see (a) above) | 6,060 | 5,310 |
+------------------------------------------+---------+---------+
6. EARNINGS PER SHARE
The calculation of basic earnings per ordinary share is based on a profit after
tax of GBP17,944,000 (2008: GBP14,485,000) and 76,200,428 (2008: 75,386,189)
ordinary shares, being the weighted average number of ordinary shares in issue
during the period.
The diluted earnings per ordinary share is calculated by including in the
weighted average number of shares the dilutive effect of potential ordinary
shares related to committed share options as described in note 8. For 2009 the
diluted ordinary shares were based on 78,736,155 ordinary shares that included
2,535,727 potential weighted number of options.
The following reflects the income and share data used in the calculation of
adjusted earnings per share computations:
+------------------------------------------+---------+---------+
| | 2009 | 2008 |
+------------------------------------------+---------+---------+
| | GBP'000 | GBP'000 |
+------------------------------------------+---------+---------+
| Profit for the year | 17,944 | 14,485 |
+------------------------------------------+---------+---------+
| Amortisation of intangible fixed assets | 5,808 | 5,743 |
+------------------------------------------+---------+---------+
| Less: tax benefit associated with the | (1,620) | (1,392) |
| amortisation of intangible fixed assets | | |
+------------------------------------------+---------+---------+
| Adjusted profit for the year | 22,132 | 18,836 |
+------------------------------------------+---------+---------+
| | | |
+------------------------------------------+---------+---------+
+------------------------------------------+------------+------------+
| | 2009 | 2008 |
+------------------------------------------+------------+------------+
| | No. | No. |
+------------------------------------------+------------+------------+
| Weighted average number of ordinary | 76,200,428 | 75,386,189 |
| shares for basic earnings per share | | |
+------------------------------------------+------------+------------+
| Effect of dilution resulting from share | 2,535,727 | 1,871,780 |
| options | | |
+------------------------------------------+------------+------------+
| Weighted average number of ordinary | 78,736,155 | |
| shares adjusted for the effect of | | 77,257,969 |
| dilution | | |
+------------------------------------------+------------+------------+
| | | |
+------------------------------------------+------------+------------+
| | 2009 | 2008 |
+------------------------------------------+------------+------------+
| Adjusted earnings per ordinary share - | 29.05 | 24.99 |
| basic (pence) | | |
+------------------------------------------+------------+------------+
| Adjusted earnings per ordinary share - | 28.11 | 24.38 |
| diluted (pence) | | |
+------------------------------------------+------------+------------+
| | | |
+------------------------------------------+------------+------------+
There have been no other transactions involving ordinary shares or potential
ordinary shares between the reporting date and the date of completion of the
financial statements.
7. INTANGIBLE ASSETS
+----------------------------+-----------+--------------+----------+----------+
| | Customers | Intellectual | Goodwill | Total |
| | | Property | | |
+----------------------------+-----------+--------------+----------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+-----------+--------------+----------+----------+
| Cost: | | | | |
+----------------------------+-----------+--------------+----------+----------+
| At 1 January 2008 | 3,844 | 35,198 | 87,817 | 126,859 |
+----------------------------+-----------+--------------+----------+----------+
| Acquisition of | 1,641 | 2,449 | 11,737 | 15,827 |
| subsidiaries | | | | |
+----------------------------+-----------+--------------+----------+----------+
| Reclassification | - | (1,661) | 1,661 | - |
+----------------------------+-----------+--------------+----------+----------+
| Adjustment to deferred tax | - | - | (465) | (465) |
| liability | | | | |
+----------------------------+-----------+--------------+----------+----------+
| Recovery of costs from | - | - | (1,354) | (1,354) |
| Trados acquisition | | | | |
+----------------------------+-----------+--------------+----------+----------+
| Currency adjustment | 1,727 | 9,239 | 20,470 | 31,436 |
+----------------------------+-----------+--------------+----------+----------+
| At 1 January 2009 | 7,212 | 45,225 | 119,866 | 172,303 |
+----------------------------+-----------+--------------+----------+----------+
| Acquisition of | 2,712 | 2,073 | 10,393 | 15,178 |
| subsidiaries | | | | |
+----------------------------+-----------+--------------+----------+----------+
| Adjustment to deferred tax | - | - | (429) | (429) |
| asset | | | | |
+----------------------------+-----------+--------------+----------+----------+
| Currency adjustment | (569) | (3,277) | (7,148) | (10,994) |
+----------------------------+-----------+--------------+----------+----------+
| At 31 December 2009 | 9,355 | 44,021 | 122,682 | 176,058 |
+----------------------------+-----------+--------------+----------+----------+
| | | | | |
+----------------------------+-----------+--------------+----------+----------+
| Amortisation: | | | | |
+----------------------------+-----------+--------------+----------+----------+
| At 1 January 2008 | (1,091) | (11,265) | (12,203) | (24,559) |
+----------------------------+-----------+--------------+----------+----------+
| Provided during the year | (988) | (4,755) | - | (5,743) |
+----------------------------+-----------+--------------+----------+----------+
| Currency adjustment | (598) | (3,178) | - | (3,776) |
+----------------------------+-----------+--------------+----------+----------+
| At 1 January 2009 | (2,677) | (19,198) | (12,203) | (34,078) |
+----------------------------+-----------+--------------+----------+----------+
| Provided during the year | (1,225) | (4,583) | - | (5,808) |
+----------------------------+-----------+--------------+----------+----------+
| Currency adjustment | 244 | 1,208 | - | 1,452 |
+----------------------------+-----------+--------------+----------+----------+
| At 31 December 2009 | (3,658) | (22,573) | (12,203) | (38,434) |
+----------------------------+-----------+--------------+----------+----------+
| | | | | |
+----------------------------+-----------+--------------+----------+----------+
| Net book value: | | | | |
+----------------------------+-----------+--------------+----------+----------+
| At 31 December 2009 | 5,697 | 21,448 | 110,479 | 137,624 |
+----------------------------+-----------+--------------+----------+----------+
| | | | | |
+----------------------------+-----------+--------------+----------+----------+
| At 1 January 2009 | 4,535 | 26,027 | 107,663 | 138,225 |
+----------------------------+-----------+--------------+----------+----------+
In 2008 GBP1,354,000 cash was received reflecting a reduction in the
consideration paid for Trados Inc, acquired in 2005. In 2009, an adjustment of
GBP429,000 was made to goodwill in respect of a deferred tax asset not
recognised at the date of the Trados acquisition utilised during the year.
Customers and intellectual property are written off on a straight-line basis
over its estimated useful life of between 5 and 15 years. As from 1 January
2004, the date of transition to IFRS, goodwill was no longer amortised but is
now subject to annual impairment testing.
8. SHARE-BASED PAYMENT PLANS
SDL Share Option Scheme
The table below sets out the number and weighted average exercise prices (WAEP)
of, and movements in, the SDL Share Options Scheme during the year:
+------------------------------+-----------+---------+-----------+---------+
| | 2009 | 2009 | 2008 | 2008 |
+------------------------------+-----------+---------+-----------+---------+
| | No. | WAEP | No. | WAEP |
+------------------------------+-----------+---------+-----------+---------+
| Outstanding at the beginning | 2,617,889 | GBP2.03 | 2,861,508 | GBP1.65 |
| of the year | | | | |
+------------------------------+-----------+---------+-----------+---------+
| Granted during the year | 340,940 | GBP2.91 | 856,300 | GBP2.79 |
+------------------------------+-----------+---------+-----------+---------+
| Forfeited during the year | (494,500) | GBP3.21 | (369,233) | GBP3.38 |
+------------------------------+-----------+---------+-----------+---------+
| Exercised during the year | (462,289) | GBP1.12 | (730,686) | GBP0.67 |
+------------------------------+-----------+---------+-----------+---------+
| Expired during the year | - | - | - | - |
+------------------------------+-----------+---------+-----------+---------+
| Outstanding at the end of | 2,002,040 | GBP2.11 | 2,617,889 | GBP2.03 |
| the year | | | | |
+------------------------------+-----------+---------+-----------+---------+
| Exercisable at 31 December | 1,170,756 | GBP1.56 | 1,348,904 | GBP1.35 |
+------------------------------+-----------+---------+-----------+---------+
The weighted average share price at the date of exercise for the options
exercised is GBP3.41 (2008: GBP3.31).
For the share options outstanding as at 31 December 2009, the weighted average
remaining contractual life is 3.66 years (2008: 6.74 years).
The fair value of equity settled share options granted under the SDL Share
Option Scheme is estimated as at the date of grant using the Black Scholes
model. The following table lists the inputs to the model:
+------------------------------------------------+-------+-------+
| | 2009 | 2008 |
+------------------------------------------------+-------+-------+
| Weighted average share price (pence) | 303 | 279 |
+------------------------------------------------+-------+-------+
| Expected volatility | 45% | 35% |
+------------------------------------------------+-------+-------+
| Expected option life | 4 | 4 |
| | years | years |
+------------------------------------------------+-------+-------+
| Expected dividends | 0-1% | 0% |
+------------------------------------------------+-------+-------+
| Risk-free interest rate | 2% | 5% |
+------------------------------------------------+-------+-------+
The range of exercise prices for options outstanding at the end of the year was
GBP0.01-GBP3.745 (2008: GBP0.01-GBP3.745).
+------------+-------------------+------------+------------+------------+
| | Date of | Exercise | 2009 | 2008 |
| | Grant | Period | Number | Number |
+------------+-------------------+------------+------------+------------+
| GBP0.01 - | 01/01/92-16/04/03 | 10 years | 50,000 | 171,900 |
| GBP0.50 | | after | | |
| | | grant date | | |
+------------+-------------------+------------+------------+------------+
| GBP0.51 - | 15/10/99-12/12/03 | 10 years | 299,747 | 357,247 |
| GBP1.00 | | after | | |
| | | grant date | | |
+------------+-------------------+------------+------------+------------+
| GBP1.01 - | 02/04/04-04/04/05 | 10 years | 485,116 | 667,155 |
| GBP1.50 | | after | | |
| | | grant date | | |
+------------+-------------------+------------+------------+------------+
| GBP1.51 - | 07/04/01 | 10 years | 3,000 | 3,750 |
| GBP2.00 | | after | | |
| | | grant date | | |
+------------+-------------------+------------+------------+------------+
| GBP2.01 - | 22/03/06-03/10/06 | 10 years | 119,570 | 202,270 |
| GBP2.50 | | after | | |
| | | grant date | | |
+------------+-------------------+------------+------------+------------+
| GBP2.51 - | 28/02/08-2/3/09 | 10 years | 821,390 | 770,700 |
| GBP3.00 | | after | | |
| | | grant date | | |
+------------+-------------------+------------+------------+------------+
| GBP3.01 - | 12/05/00-1/6/00 | 10 years | 12,250 | 16,000 |
| GBP3.50 | | after | | |
| | | grant date | | |
+------------+-------------------+------------+------------+------------+
| GBP3.51 - | 1/06/01-23/5/07 | 10 years | 210,967 | 428,867 |
| GBP4.00 | | after | | |
| | | grant date | | |
+------------+-------------------+------------+------------+------------+
| Total | | | 2,002,040 | 2,617,889 |
+------------+-------------------+------------+------------+------------+
SDL Long Term Incentive Plan
The fair value of equity-settled shares granted under the SDL Long Term
Incentive Plan is estimated as at the date of grant using a Monte-Carlo model,
taking into account the terms and conditions upon which the options were
granted. The following table lists the inputs to the model used for the year
ended 31 December 2009.
+--------------------------------+-----------+--------+-----------+------+
| | 2009 | 2008 | |
+--------------------------------+-----------+--------+------------------+
| Expected volatility | 45% | 35-45% | |
+--------------------------------+-----------+--------+------------------+
| Expected life | 3 | 3 | |
| | years | years | |
+--------------------------------+-----------+--------+------------------+
| Expected dividends | 0-1% | 0% | |
+--------------------------------+-----------+--------+------------------+
| Risk-free interest rate | 2% | 5% | |
+--------------------------------+-----------+--------+------------------+
| | | | |
+--------------------------------+-----------+--------+------------------+
| | 2009 | 2009 | 2008 | 2008 |
+--------------------------------+-----------+--------+-----------+------+
| | No. | WAEP | No. | WAEP |
+--------------------------------+-----------+--------+-----------+------+
| Outstanding at the beginning | 1,937,158 | - | 1,190,174 | - |
| of the year | | | | |
+--------------------------------+-----------+--------+-----------+------+
| Granted during the year | 1,187,115 | - | 817,803 | - |
+--------------------------------+-----------+--------+-----------+------+
| Exercised during the year | (831,357) | - | - | - |
+--------------------------------+-----------+--------+-----------+------+
| Forfeited during the year | (59,078) | - | (70,819) | - |
+--------------------------------+-----------+--------+-----------+------+
| Outstanding at the end of the | 2,233,838 | - | 1,937,158 | - |
| year | | | | |
+--------------------------------+-----------+--------+-----------+------+
| Exercisable at 31 December | Nil | - | Nil | - |
+--------------------------------+-----------+--------+-----------+------+
All LTIPs are exercisable at nil cost to the individual (with the exception of
the 1p nominal value of each share awarded).
SDL Save As You Earn Scheme (SAYE)
The table below sets out the number and weighted average exercise prices (WAEP)
of, and movements in, the SDL Save As You Earn Scheme during the year:
+--------------------------------+----------+------+---------+------+
| | 2009 | 2009 | 2008 | 2008 |
+--------------------------------+----------+------+---------+------+
| | No. | WAEP | No. | WAEP |
+--------------------------------+----------+------+---------+------+
| Outstanding at the beginning | 169,810 | - | - | - |
| of the year | | | | |
+--------------------------------+----------+------+---------+------+
| Granted during the year | 32,099 | - | 170,544 | - |
+--------------------------------+----------+------+---------+------+
| Exercised during the year | (3,243) | - | - | - |
+--------------------------------+----------+------+---------+------+
| Forfeited during the year | (14,450) | - | (734) | - |
+--------------------------------+----------+------+---------+------+
| Outstanding at the end of the | 184,216 | - | 169,810 | - |
| year | | | | |
+--------------------------------+----------+------+---------+------+
| Exercisable at 31 December | Nil | - | Nil | - |
+--------------------------------+----------+------+---------+------+
For the SAYE shares outstanding as at 31 December 2009, the weighted average
remaining contractual life is 2.32 years (2008: 2.58 years).
The fair value of equity settled share options granted under the SDL SAYE Scheme
is estimated as at the date of grant using the Black Scholes model. The
following table lists the inputs to the model:
+--------------------------------+---------+-------+
| | 2009 | 2008 |
+--------------------------------+---------+-------+
| Weighted average share price | 261 | 256 |
| (pence) | | |
+--------------------------------+---------+-------+
| Expected volatility | 45% | 35% |
+--------------------------------+---------+-------+
| Expected option life | 3.5 | 3.5 |
| | years | years |
+--------------------------------+---------+-------+
| Expected dividends | 0-1% | 0% |
+--------------------------------+---------+-------+
| Risk-free interest rate | 2% | 5% |
+--------------------------------+---------+-------+
9. ADDITIONAL CASH FLOW INFORMATION
Analysis of group net cash:
+------------------+---------+---------+-------------+-------------+----------+
| | 1 | Cash | Debt | Exchange | 31 |
| | January | flow | Acquired | differences | December |
| | 2009 | | On | | 2009 |
| | | | acquisition | | |
+------------------+---------+---------+-------------+-------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+---------+---------+-------------+-------------+----------+
| Cash and cash | 31,227 | 17,031 | - | (2,098) | 46,160 |
| equivalents | | | | | |
+------------------+---------+---------+-------------+-------------+----------+
| Loans | - | - | - | - | - |
+------------------+---------+---------+-------------+-------------+----------+
| | 31,227 | 17,031 | - | (2,098) | 46,160 |
+------------------+---------+---------+-------------+-------------+----------+
+------------------+---------+---------+-------------+-------------+----------+
| | 1 | Cash | Debt | Exchange | 31 |
| | January | flow | Acquired | differences | December |
| | 2008 | | on | | 2008 |
| | | | acquisition | | |
+------------------+---------+---------+-------------+-------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------+---------+---------+-------------+-------------+----------+
| Cash and cash | 21,511 | 3,275 | - | 6,441 | 31,227 |
| equivalents | | | | | |
+------------------+---------+---------+-------------+-------------+----------+
| Loans | (6,055) | 8,055 | (1,932) | (68) | - |
+------------------+---------+---------+-------------+-------------+----------+
| | 15,456 | 11,330 | (1,932) | 6,373 | 31,227 |
+------------------+---------+---------+-------------+-------------+----------+
10. POST STATEMENT OF FINANCIAL POSITION EVENTS
There are no known events occurring after the date of the Statement of Financial
Position that require disclosure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR TFMLTMBBTBJM
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