TIDMSDL
RNS Number : 3973Q
SDL PLC
03 August 2010
3 August 2010
SDL PLC
Interim results for the six months ended 30 June 2010
Global Information Management strategy builds
further momentum - strong growth in revenue and operating profit
SDL plc ("SDL" or "the Group"), a leader in the emerging market for Global
Information Management (GIM) solutions, is pleased to announce its unaudited
interim results for the six months ended 30 June 2010.
+--------------------------------------+-----------+-----------+--------+
| | Unaudited | Unaudited | % |
| | 6 months | 6 months | Change |
| | to | to | |
| | 30 June | 30 June | |
| | 2010 | 2009 | |
| | GBP'000 | GBP'000 | |
+--------------------------------------+-----------+-----------+--------+
| Income Statement: | | | |
+--------------------------------------+-----------+-----------+--------+
| Revenue | 94,500 | 83,293 | +13% |
+--------------------------------------+-----------+-----------+--------+
| | | | |
+--------------------------------------+-----------+-----------+--------+
| Profit before tax and amortisation | 16,332 | 14,519 | +12% |
| of intangible assets | | | |
+--------------------------------------+-----------+-----------+--------+
| Profit before tax | 12,856 | 11,779 | +9% |
+--------------------------------------+-----------+-----------+--------+
| | | | |
+--------------------------------------+-----------+-----------+--------+
| Earnings per ordinary share - basic | 12.44 | 11.41 | +9% |
| (pence) | | | |
+--------------------------------------+-----------+-----------+--------+
| Adjusted earnings per ordinary share | | 14.02 | +12% |
| - basic (pence) | 15.67 | | |
+--------------------------------------+-----------+-----------+--------+
| | | | |
+--------------------------------------+-----------+-----------+--------+
| Statement of Financial Position: | | | |
+--------------------------------------+-----------+-----------+--------+
| Total equity | 179,480 | 154,658 | |
+--------------------------------------+-----------+-----------+--------+
| Cash and cash equivalents | 55,482 | 32,919 | |
+--------------------------------------+-----------+-----------+--------+
| Interest bearing loans and | - | - | |
| borrowings | | | |
+--------------------------------------+-----------+-----------+--------+
Highlights:
· Strong performance in revenue and Profit Before Taxation and Amortisation
- ahead of expectations
· Constant currency growth in all divisions:
o Language Services - headline revenue growth 9% (12% at constant currency)
o Language Technologies - headline revenue growth flat (2% at constant
currency)
o Content Management Technologies - headline revenue growth 43% (19% at
constant currency excluding acquisition impact)
· Momentum and Pipeline building
o Recovery in Language Services demand
o Licence revenue ahead (11% at constant currency) in Language Technologies
o Strong growth in Content Management Technologies after well executed
integration phase
· Stable profit before taxation and amortisation margin
o Accelerated investment in growth, particularly R&D
· Cash flow remains strong - on track for maiden dividend
· Two new innovations LiveContent and SmartTarget introduced to market
· Two acquisitions completed so far in 2010
o Language Weaver - global authority in Statistical Machine Translation
o Xopus - extends reach of content management solutions to non technical
authors
Mark Lancaster, Chairman and Chief Executive of SDL, commented:
I am delighted to report strong performance for the first half of 2010
significantly ahead of the prior year, at record levels, and ahead of market
expectations for both revenue and operating profit.
During the period we have made good progress in revenue delivery for Content
Management Technologies, and whilst Language Technologies revenues were flat
compared to 2009, we experienced solid growth in licence sales and acceleration
of progress in the second quarter following the implementation of focused
marketing initiatives. We have seen continued steady recovery in demand from
2009 levels in Language Services, underpinned in part by growth in the less
mature accounts.
Recent customer wins and the level of adoption of our technology in key
customers supports our strategy of best in class integrated end to end solution
capabilities for our clients.
Strategically, we have been very pleased to complete two acquisitions this year.
By moving to take significant early market share in key strategic growth areas
we are confident that these acquisitions will cement SDL's leadership in Global
Information Management as we move into the future digital age.
The scope of our Global Information Management solutions has further expanded
and become more integrated. We feel confident moving into the second half of
2010 and beyond that our strategy and execution will continue to deliver growth
and stability.
For further information please contact:
+--------------------------------------+-------------------+
| SDL plc | Tel: 01628 410 |
| | 127 |
+--------------------------------------+-------------------+
| Mark Lancaster, Chief Executive | |
| John Hunter, Chief Financial Officer | |
+--------------------------------------+-------------------+
| | |
+--------------------------------------+-------------------+
| Financial Dynamics | Tel: 020 7831 |
| | 3113 |
+--------------------------------------+-------------------+
| Edward Bridges /Juliet Clarke /Emma | |
| Appleton/ Haya Herbert-Burns | |
+--------------------------------------+-------------------+
About SDL
SDL is the leader in Global Information Management solutions. SDL's solutions
increase 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, CNH,
FICO, Hewlett-Packard, KLM, Microsoft, NetApp, Philips, SAP, Sony and Virgin
Atlantic. SDL has over 1500 enterprise customers, has deployed over 170,000
software licenses and provides access to on-demand portals for 10 million
customers per month. It has a global infrastructure of more than 50 offices in
34 countries. For more information, visit www.sdl.com.
Chairman's Statement
Summary Performance
I am delighted to report strong performance for the first half of 2010
significantly ahead of the prior year, at record levels, and ahead of market
expectations for both revenue and operating profit.
During the period we have made good progress in revenue delivery for Content
Management Technologies, and whilst Language Technologies revenues were flat
compared to 2009, we experienced solid growth in licence sales and acceleration
of progress in the second quarter, following the implementation of focused
marketing initiatives. We have seen continued steady recovery in demand from
2009 levels in Language Services, underpinned in part by growth in the less
mature accounts.
Whilst we continue to believe economic recovery has some fragility to it, and we
continue to act with a degree of appropriate caution, our pace of investment in
growth has accelerated in the first half of 2010 as we continue to execute our
strategy to capitalise on strong growth opportunities in the Technologies
businesses. I am also delighted that we have committed to opening an office in
Turkey in the second half of 2010, which will further build our infrastructure
in Language Services, allowing us to deliver scale and quality in a significant
growth market. We continue to be committed to providing leading Technology and
Service solutions in the content industry. Recent customer wins and the level of
adoption of our technology in key customers supports our strategy of providing
best in class integrated end to end solutions.
Strategically, we have been very pleased to complete two acquisitions this year.
The acquisition of Xopus, a leading provider of a user friendly online XML
editor, addresses the adoption of structured authoring for non-technical writers
and will be fully integrated within our suite of Content Management
Technologies. The acquisition of Language Weaver Inc, a pioneer in Statistical
Machine Translation, delivers a best-of-breed machine translation technology
that helps enterprises and governments translate the large volumes of content in
today's increasingly online world. This addition creates a compelling
combination of SDL's leadership in content and language technology solutions
with Language Weaver's authority in machine translation technology. By moving to
take significant early market share in key strategic growth areas we are
confident that these acquisitions will cement SDL's leadership in Global
Information Management as we move into the future digital age and create
outstanding value for our clients and investors.
Revenue for the first half of 2010 was GBP94.5 million (2009: GBP83.3 million)
and profit before taxation and amortisation of intangible assets ("PBTA") for
the period was GBP16.3 million (2009: GBP14.5 million) with profit before
taxation of GBP12.9 million (2009: GBP11.8 million). Net cash in the business at
the end of the period was GBP55.5 million (End December 2009: GBP46.2 million)
after spending GBP1.0 million on the Xopus acquisition in June 2010.
Headline revenue growth of 13% comprised a 5% contribution from acquisitions
(XyEnterpise and Fredhopper are not included in prior year first half
comparatives); a 3% adverse impact from currency and 11% organic growth at
constant currency. All three operating segments delivered constant currency
revenue growth in the first half of 2010, validating the improvements in
pipeline we saw at the end of 2009 and in early 2010. We also continue to make
excellent progress in cross leveraging our solutions. Overall PBTA margin was
stable year on year at 17.3% (2009 17.4%), as we moved to accelerate strategic
investment in growth, particularly in research and development.
The business retained its strong cash generation characteristics in H1 2010.
Cash generated from operations stood at GBP13.2 million (2009: GBP16.8 million).
Whilst we did not see a repeat of the working capital inflow we saw in 2009, our
receivables collection progress has been sustained in the first half of 2010 and
we continued to place high priority on free cash generation. Given the stability
of our cash flow we remain on track to initiate a maiden dividend payment for
the 2010 financial year, providing a return to those investors who value income
as well as growth.
Content Management Technologies (contributing GBP20.9 million or 22% revenue to
the Group and GBP3.4 million or 21% of the PBTA) (2009: contributing GBP14.7
million or 18% revenue to the Group and GBP2.9 million or 20% of the PBTA)
The division comprises Web Content Management Solutions, Structured Content
Technologies and eCommerce Technologies, and was strengthened by the
acquisitions of Fredhopper in December 2009 and Xopus in June 2010.
Content Management Technologies continued to drive forward significantly with
headline revenue growth of 43% in the first half of 2010 which was derived 28%
from acquisition, a negative impact of 4% due to currency and with 19% organic
growth at constant currency. The acquisition of Fredhopper and growth investment
in SDL LiveContent(TM) during the period reduced margins by approximately 2%.
Overall licence revenues were ahead of the prior year following completion of a
well executed integration of XyEnterprise into SDL and hence reflecting strong
cross selling in the Structured Content Management business.
As part of our continued investment in innovation we launched SDL
LiveContent(TM), a dynamic publishing solution for technical documentation that
addresses the evolving demands of Internet and Smartphone users who expect
on-demand, personalized, interactive technical documentation rather than in
static PDF and print format. This next generation product integrates with the
SDL Trisoft(TM) Component Document Content Management solution, empowering
companies to transform static documentation managed as publications into rich
interactive, web-based information with animated graphics, sophisticated search
for easy navigation and analytics that allow companies to understand how
customers are using their content.
We also launched SDL SmartTarget, an integration of the SDL Fredhopper
technology into the SDL Tridion product suite, enhancing the reach and
functionality of our Web Content Management solutions into the targeting and
personalisation arena, a technology that we consider will play a key role in the
future of Web Content Management.
Language Technologies (contributing GBP14.6 million or 15% revenue to the Group
and GBP1.3 million or 8% of the PBTA) (2009: contributing GBP14.7 million or 18%
revenue to the Group and GBP1.7 million or 11% of the PBTA)
Headline Language Technologies revenues were flat compared to the first half of
2009 and slightly ahead of the second half of 2009. Constant currency revenues
were 2% above 2009 for the period. Overall licence sales saw good recovery from
2009 and were ahead by 9% (approximately 11% in constant currency), with lower
services activity lagging from 2009 demand offsetting this licence growth. We
saw acceleration in demand in the second quarter following new initiatives on
desktop adoption and focussed marketing approaches in Europe and Asia. We see a
degree of regional contrast in performance with the North American Enterprise
business moving forward strongly, offset by a slower demand environment for
Enterprise products in Europe.
We continued to invest significantly in building our Language Technologies
business, investing further into our enhanced integrated language platform. We
have also strengthened our organization in China following the strong adoption
of SDL Trados Studio and SDL Translation Memory Server, our entry level
translation management system. Our SaaS offering in the enterprise space is also
generating significant client interest.
Language Services (contributing GBP59.0 million or 63% of group revenue and
GBP11.8 million or 72% of PBTA). (2009: contributing GBP54.0 million or 64% of
group revenue and GBP10.0 million or 69% of PBTA).
In the Language Services segment, headline revenue grew by 9% in the first half
of 2010, with constant currency revenues 12% ahead of prior year. We are very
pleased to see continued recovery of the demand environment and pipeline
strengthening in this business, with activity levels continuing to rise, led by
North American and Asian demand. This consisted of both increases in our base
business and acceleration in momentum from new wins consolidating into our
revenue base. We are very pleased with how the business is positioned at this
stage in the economic recovery and in the absence of further economic decline we
expect this improvement in momentum to be sustained. The resilience of the
profit model continues to be very strong and effort on sourcing strategy,
network development and optimisation and process efficiency using SDL
technology, as targeted in 2009, has further strengthened profitability.
Our Vision and Strategy for Global Information Management
We have continued to move forward with the execution of our strategy in the
first half of 2010; strengthening our capability to offer clients the best
technology and service solutions possible, to manage their key global
information and content needs. We are accelerating investment to provide
solutions for the new digital age, and it is exciting to see our portfolio
further strengthened by the addition of Xopus, which extends the provision of
structured content management solutions to non technical authors; and Language
Weaver, which brings best in class Statistical Machine Translation capability to
the SDL portfolio and further extends the breadth and reach of our language
solutions. It also gives us pleasure to see the launch of the SDL
LiveContent(TM) product to strengthen our graphical, interactive and electronic
delivery of structured content solutions. We further invest in our language
technology platform integration towards an industry leading open and scalable
platform. Our commitment to be the innovator who makes trends, rather the
follower who reacts to them, remains undiminished. It is also fantastic to see
the launch of SDL SmartTarget, an integration of the SDL Fredhopper technology
into our Web Content Management product, SDL Tridion. We are seeing an
increasing number of our key accounts purchase multiple integrated solutions of
technology and services from SDL. 2010 has seen an acceleration of multiple
offerings into clients such as Emirates, Alcatel-Lucent, Intel, Micro Focus,
Cisco, Philips, Dell, TomTom, Mandarin Oriental Hotel Group and Yamaha. We look
forward to continuing to innovate and evolve our solutions to help our clients
maximise revenue potential across their increasingly global customer bases. We
will continue to focus on providing the solutions to manage global digital
content from creation to publishing.
Outlook and Current Trading
In the first half of 2010 we delivered excellent results, resumed constant
currency growth in each of our businesses and accelerated our pace of execution.
We have also completed two acquisitions so far this year. Our business continues
to grow, with an excellent combination of growth potential as well as solid
defensive characteristics. Our success in the first half was partially due to
cross leveraging, where we expect to see continued momentum in H2 2010, and
market stability, with growth in China and North America. We expect European
economies to remain broadly flat in the second half of 2010, as was the case in
the first half of 2010, with continued modest growth in the North American and
Asian economies. We anticipate SDL will continue to outperform in our market
sectors. The scope of our Global Information Management solutions has further
expanded and become more integrated. We feel confident moving into the second
half of 2010 and beyond, that our strategy and execution will continue to
deliver growth and stability.
Mark Lancaster
Chairman and CEO
SDL plc
2 August 2010
SDL plc
Interim Condensed Consolidated Income Statement
+------------------------------+-------+-----------+-----------+----------+
| |Notes | Unaudited | Unaudited | Audited |
| | | 6 months | 6 months | Year to |
| | | to | to | 31 |
| | | 30 June | 30 June | December |
| | | 2010 | 2009 | 2009 |
| | | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+-------+-----------+-----------+----------+
| Continuing Operations | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Sale of goods | | 14,379 | 12,221 | 25,363 |
+------------------------------+-------+-----------+-----------+----------+
| Rendering of services | | 80,121 | 71,072 | 146,515 |
+------------------------------+-------+-----------+-----------+----------+
| REVENUE | 3 | 94,500 | 83,293 | 171,878 |
+------------------------------+-------+-----------+-----------+----------+
| | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Cost of sales | | (41,789) | (37,545) | (76,387) |
+------------------------------+-------+-----------+-----------+----------+
| GROSS PROFIT | | 52,711 | 45,748 | 95,491 |
+------------------------------+-------+-----------+-----------+----------+
| | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Administrative expenses | | (36,553) | (31,500) | (66,096) |
+------------------------------+-------+-----------+-----------+----------+
| OPERATING PROFIT BEFORE | | 16,158 | 14,248 | 29,395 |
| AMORTISATION OF INTANGIBLE | | | | |
| ASSETS | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Amortisation of intangible | | (3,476) | (2,740) | (5,808) |
| assets | | | | |
+------------------------------+-------+-----------+-----------+----------+
| | 4 | 12,682 | 11,508 | 23,587 |
| OPERATING PROFIT | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Finance revenue | | 174 | 271 | 426 |
+------------------------------+-------+-----------+-----------+----------+
| PROFIT BEFORE TAX | | 12,856 | 11,779 | 24,013 |
+------------------------------+-------+-----------+-----------+----------+
| | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Tax expense | 5 | (3,233) | (3,121) | (6,060) |
+------------------------------+-------+-----------+-----------+----------+
| | | | | |
+------------------------------+-------+-----------+-----------+----------+
| PROFIT FOR THE PERIOD | | 9,623 | 8,658 | 17,953 |
+------------------------------+-------+-----------+-----------+----------+
| | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Profit for the period | | 9,623 | 8,649 | 17,944 |
| attributable to equity | | | | |
| holders of the parent | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Non controlling interest | | - | 9 | 9 |
+------------------------------+-------+-----------+-----------+----------+
| | | 9,623 | 8,658 | 17,953 |
+------------------------------+-------+-----------+-----------+----------+
| | | | | |
| | | Pence | Pence | Pence |
+------------------------------+-------+-----------+-----------+----------+
| Earnings per ordinary share | 6 | 12.44 | 11.41 | 23.55 |
| - basic (pence) | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Earnings per ordinary share | 6 | 12.05 | 10.98 | 22.79 |
| - diluted (pence) | | | | |
+------------------------------+-------+-----------+-----------+----------+
Adjusted earnings per ordinary share (basic and diluted) are shown in note 6.
SDL plc
Interim Condensed Statement of Comprehensive Income
+------------------------------+-----+-----------+-----------+----------+
| | | Unaudited | Unaudited | Audited |
| | | 6 months | 6 months | Year to |
| | | to | to | 31 |
| | | 30 June | 30 June | December |
| | | 2010 | 2009 | 2009 |
| | | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+-----+-----------+-----------+----------+
| | | | | |
+------------------------------+-----+-----------+-----------+----------+
| Profit for the period | | 9,623 | 8,658 | 17,953 |
+------------------------------+-----+-----------+-----------+----------+
| | | | | |
+------------------------------+-----+-----------+-----------+----------+
| Currency translation | | (7,154) | (21,812) | (13,549) |
| differences on foreign | | | | |
| operations | | | | |
+------------------------------+-----+-----------+-----------+----------+
| Currency translation | | 2,104 | 3,653 | 2,255 |
| differences on foreign | | | | |
| currency equity loans to | | | | |
| foreign subsidiaries | | | | |
+------------------------------+-----+-----------+-----------+----------+
| Income tax (charge)/ benefit | | (449) | - | 847 |
| on currency translation | | | | |
| differences on foreign | | | | |
| currency equity loans to | | | | |
| foreign subsidiaries | | | | |
+------------------------------+-----+-----------+-----------+----------+
| Other comprehensive income | | (5,499) | (18,159) | (10,447) |
+------------------------------+-----+-----------+-----------+----------+
| Total comprehensive income | | 4,124 | (9,501) | 7,506 |
+------------------------------+-----+-----------+-----------+----------+
| | | | | |
+------------------------------+-----+-----------+-----------+----------+
| Attributable to: | | | | |
+------------------------------+-----+-----------+-----------+----------+
| Equity holders of the parent | | 4,124 | (9,510) | 7,497 |
+------------------------------+-----+-----------+-----------+----------+
| Non controlling interest | | - | 9 | 9 |
+------------------------------+-----+-----------+-----------+----------+
| | | 4,124 | (9,501) | 7,506 |
+------------------------------+-----+-----------+-----------+----------+
SDL plc
Interim Condensed Consolidated Statement of Financial Position
+------------------------------+-------+-----------+-----------+----------+
| |Notes | Unaudited | Unaudited | Audited |
| | | 30 June | 30 June | 31 |
| | | 2010 | 2009 | December |
| | | GBP'000 | GBP'000 | 2009 |
| | | | | GBP'000 |
+------------------------------+-------+-----------+-----------+----------+
| ASSETS | | | | |
+------------------------------+-------+-----------+-----------+----------+
| NON CURRENT ASSETS | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Property, plant and | | 4,939 | 4,044 | 5,005 |
| equipment | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Intangible assets | | 132,875 | 131,183 | 137,624 |
+------------------------------+-------+-----------+-----------+----------+
| Deferred income tax | | 5,751 | 4,189 | 5,621 |
+------------------------------+-------+-----------+-----------+----------+
| Rent deposits | | 851 | 655 | 819 |
+------------------------------+-------+-----------+-----------+----------+
| | | 144,416 | 140,071 | 149,069 |
+------------------------------+-------+-----------+-----------+----------+
| CURRENT ASSETS | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Trade and other receivables | | 40,281 | 34,135 | 39,454 |
+------------------------------+-------+-----------+-----------+----------+
| Financial assets | 9 | - | 44 | - |
+------------------------------+-------+-----------+-----------+----------+
| Current tax asset | | 898 | 1,330 | 1,002 |
+------------------------------+-------+-----------+-----------+----------+
| Cash and cash equivalents | | 55,482 | 32,919 | 46,160 |
+------------------------------+-------+-----------+-----------+----------+
| | | 96,661 | 68,428 | 86,616 |
+------------------------------+-------+-----------+-----------+----------+
| TOTAL ASSETS | | 241,077 | 208,499 | 235,685 |
+------------------------------+-------+-----------+-----------+----------+
| | | | | |
+------------------------------+-------+-----------+-----------+----------+
| LIABILITIES | | | | |
+------------------------------+-------+-----------+-----------+----------+
| CURRENT LIABILITIES | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Trade and other payables | | (43,548) | (39,268) | (45,504) |
+------------------------------+-------+-----------+-----------+----------+
| Current tax liabilities | | (8,833) | (6,887) | (6,794) |
+------------------------------+-------+-----------+-----------+----------+
| Provisions | | (1,310) | (38) | (1,102) |
+------------------------------+-------+-----------+-----------+----------+
| | | (53,691) | (46,193) | (53,400) |
+------------------------------+-------+-----------+-----------+----------+
| NON CURRENT LIABILITIES | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Interest bearing loans and | 7 | - | - | - |
| borrowings | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Other payables | | (33) | (107) | (65) |
+------------------------------+-------+-----------+-----------+----------+
| Deferred income tax | | (6,553) | (6,481) | (7,298) |
+------------------------------+-------+-----------+-----------+----------+
| Provisions | | (1,320) | (1,060) | (1,817) |
+------------------------------+-------+-----------+-----------+----------+
| | | (7,906) | (7,648) | (9,180) |
+------------------------------+-------+-----------+-----------+----------+
| TOTAL LIABILITIES | | (61,597) | (53,841) | (62,580) |
+------------------------------+-------+-----------+-----------+----------+
| NET ASSETS | | 179,480 | 154,658 | 173,105 |
+------------------------------+-------+-----------+-----------+----------+
| EQUITY | | | | |
+------------------------------+-------+-----------+-----------+----------+
| Share capital | | 778 | 760 | 770 |
+------------------------------+-------+-----------+-----------+----------+
| Share premium | | 94,661 | 92,916 | 93,207 |
+------------------------------+-------+-----------+-----------+----------+
| Shares to be issued | | - | 203 | 203 |
+------------------------------+-------+-----------+-----------+----------+
| Retained earnings | | 60,833 | 39,784 | 50,218 |
+------------------------------+-------+-----------+-----------+----------+
| Foreign exchange differences | | 23,208 | 20,995 | 28,707 |
+------------------------------+-------+-----------+-----------+----------+
| TOTAL EQUITY ATTRIBUTABLE TO | | 179,480 | 154,658 | 173,105 |
| EQUITY HOLDERS OF THE PARENT | | | | |
+------------------------------+-------+-----------+-----------+----------+
The Interim Financial Information presented in this Interim Report was approved
by the Board of Directors on 2 August 2010.
SDL plc
Interim Condensed Consolidated Statement of Changes in Equity
+---------------+----------+-------+----------+--------+----------+---------+----------+-------------+-------------+----------+
| | Share | Share | Shares | Retained | Foreign | Non | Total |
| | Capital | Premium | to be | Earnings | Exchange | Controlling | |
| | | | Issued | | Differences | interest | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| At 31 | 757 | 92,483 | 406 | 30,250 | 39,154 | (21) | 163,029 |
| December | | | | | | | |
| 2008 | | | | | | | |
| (audited) | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| Profit for | - | - | - | 8,649 | - | 9 | 8,658 |
| the period | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| Other | - | - | - | - | (18,159) | - | (18,159) |
| comprehensive | | | | | | | |
| income | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| Total | - | - | - | 8,649 | (18,159) | 9 | (9,501) |
| comprehensive | | | | | | | |
| income | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| Deferred | - | - | - | (13) | - | - | (13) |
| taxation on | | | | | | | |
| share based | | | | | | | |
| payments | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| Arising on | 3 | 230 | - | - | - | - | 233 |
| share | | | | | | | |
| issues | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| Arising on | - | - | - | - | - | 12 | 12 |
| acquisition | | | | | | | |
| of Trisoft | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| Arising on | - | 203 | (203) | - | - | - | - |
| acquisition | | | | | | | |
| of Passolo | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| Share-based | - | - | - | 898 | - | - | 898 |
| payments | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| At 30 June | 760 | 92,916 | 203 | 39,784 | 20,995 | - | 154,658 |
| 2009 | | | | | | | |
| (unaudited) | | | | | | | |
+---------------+------------------+------------------------------+---------+----------+-------------+-------------+----------+
| | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Profit for the period | - | - | - | 9,295 | - | - | 9,295 |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Other comprehensive | - | - | - | - | 7,712 | - | 7,712 |
| income | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Total comprehensive | - | - | - | 9,295 | 7,712 | - | 17,007 |
| income | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Deferred taxation on | - | - | - | (207) | - | - | (207) |
| share based payments | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Tax credit for share | - | - | - | 635 | - | - | 635 |
| options | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Arising on share | 10 | 303 | - | - | - | - | 313 |
| issues | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Arising on share | - | (12) | - | - | - | - | (12) |
| cancellation | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Arising on acquisition | - | - | - | - | - | - | - |
| of Trisoft | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Share-based payments | - | - | - | 711 | - | - | 711 |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| At 31 December 2009 | 770 | 93,207 | 203 | 50,218 | 28,707 | - | 173,105 |
| (audited) | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Profit for the period | - | - | - | 9,623 | - | - | 9,623 |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Other comprehensive | - | - | - | - | (5,499) | - | (5,499) |
| income | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Total comprehensive | - | - | - | 9,623 | (5,499) | - | 4,124 |
| income | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Deferred taxation on | - | - | - | (245) | - | - | (245) |
| share based payments | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Tax credit for share | - | - | - | 452 | - | - | 452 |
| options | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Arising on exercise of | 8 | 1,251 | - | - | - | - | 1,259 |
| share options | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Arising on acquisition | - | - | - | - | - | - | - |
| of Trisoft | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Arising on acquisition | - | 203 | (203) | - | - | - | - |
| of Passolo | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| Share-based payments | - | - | - | 785 | - | - | 785 |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| At 30 June 2010 | 778 | 94,661 | - | 60,833 | 23,208 | - | 179,480 |
| (unaudited) | | | | | | | |
+--------------------------+------------------+--------+--------------------+----------+-------------+-------------+----------+
| | | | | | | | | | | |
+---------------+----------+-------+----------+--------+----------+---------+----------+-------------+-------------+----------+
These amounts are attributable to equity holders of the parent company with the
exception of non controlling interest.
SDL plc
Interim Condensed Consolidated Statement of Cash Flows
+--------------------------------+--+-----------+-----------+----------+
| | | Unaudited | Unaudited | Audited |
| | | 6 months | 6 months | Year to |
| | | to | to | 31 |
| | | 30 June | 30 June | December |
| | | 2010 | 2009 | 2009 |
| | | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+--+-----------+-----------+----------+
| | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Profit before tax | | 12,856 | 11,779 | 24,013 |
+--------------------------------+--+-----------+-----------+----------+
| Depreciation of property, | | 1,057 | 903 | |
| plant and equipment | | | | 1,980 |
+--------------------------------+--+-----------+-----------+----------+
| Amortisation of intangible | | 3,476 | 2,740 | 5,808 |
| assets | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Finance costs | | - | - | - |
+--------------------------------+--+-----------+-----------+----------+
| Finance revenue | | (174) | (271) | (353) |
+--------------------------------+--+-----------+-----------+----------+
| Share-based payments | | 785 | 898 | 1,609 |
+--------------------------------+--+-----------+-----------+----------+
| Loss on disposal of fixed | | 82 | - | - |
| assets | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Decrease/(increase) in trade | | (794) | 11,828 | 6,997 |
| and other receivables | | | | |
+--------------------------------+--+-----------+-----------+----------+
| (Decrease)/increase in trade | | (2,680) | (9,403) | (3,981) |
| and other payables and | | | | |
| provisions | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Exchange differences | | (1,406) | (1,688) | 587 |
+--------------------------------+--+-----------+-----------+----------+
| CASH GENERATED FROM OPERATIONS | | 13,202 | 16,786 | 36,660 |
+--------------------------------+--+-----------+-----------+----------+
| Income tax paid | | (2,439) | (4,102) | (6,584) |
+--------------------------------+--+-----------+-----------+----------+
| | | | | |
+--------------------------------+--+-----------+-----------+----------+
| NET CASH FLOWS GENERATED FROM | | 10,763 | 12,684 | 30,076 |
| OPERATING ACTIVITIES | | | | |
+--------------------------------+--+-----------+-----------+----------+
| | | | | |
+--------------------------------+--+-----------+-----------+----------+
| CASH FLOWS FROM INVESTING | | | | |
| ACTIVITIES | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Payments to acquire property, | | (1,496) | (527) | (1,286) |
| plant and equipment | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Receipts from sale of | | 24 | 69 | 108 |
| property, plant and equipment | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Payment to acquire | | (1,000) | (9,159) | (14,182) |
| subsidiaries | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Net cash acquired with | | 298 | 1,287 | 1,427 |
| subsidiaries | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Interest received | | 174 | 271 | 353 |
+--------------------------------+--+-----------+-----------+----------+
| NET CASH FLOWS USED IN | | (2,000) | (8,059) | (13,580) |
| INVESTING ACTIVITIES | | | | |
+--------------------------------+--+-----------+-----------+----------+
SDL plc
Interim Condensed Consolidated Statement of Cash Flows
+--------------------------------+--+-----------+-----------+----------+
| | | Unaudited | Unaudited | Audited |
| | | 6 months | 6 months | Year to |
| | | to | to | 31 |
| | | 30 June | 30 June | December |
| | | 2010 | 2009 | 2009 |
| | | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+--+-----------+-----------+----------+
| FINANCING ACTIVITIES | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Net proceeds from issue of | | 1,259 | 233 | 535 |
| ordinary share capital | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Repayment of interest bearing | | - | - | - |
| loans and borrowings | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Proceeds from new loans | | - | - | - |
+--------------------------------+--+-----------+-----------+----------+
| Interest paid | | - | - | - |
+--------------------------------+--+-----------+-----------+----------+
| NET CASH FLOWS GENERATED FROM | | 1,259 | 233 | 535 |
| FINANCING ACTIVITIES | | | | |
+--------------------------------+--+-----------+-----------+----------+
| INCREASE/ (DECREASE) IN CASH | | 10,022 | 4,858 | 17,031 |
| AND CASH EQUIVALENTS | | | | |
+--------------------------------+--+-----------+-----------+----------+
| | | | | |
+--------------------------------+--+-----------+-----------+----------+
| MOVEMENT IN CASH AND CASH | | | | |
| EQUIVALENTS | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Cash and cash equivalents at | | 46,160 | 31,227 | 31,227 |
| start of the period | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Increase/(decrease) in cash | | 10,022 | 4,858 | 17,031 |
| and cash equivalents | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Effect of exchange rates on | | (700) | (3,166) | (2,098) |
| cash and cash equivalents | | | | |
+--------------------------------+--+-----------+-----------+----------+
| | | | | |
+--------------------------------+--+-----------+-----------+----------+
| Net cash and cash equivalents | | 55,482 | 32,919 | 46,160 |
| at end of the period | | | | |
+--------------------------------+--+-----------+-----------+----------+
SDL plc
Notes to the Interim Condensed Consolidated Financial Statements
1. Basis of preparation and accounting policies
Basis of preparation
This condensed set of financial statements has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU.
As required by the Disclosure and Transparency Rules of the Financial Services
Authority, the condensed set of financial statements has been prepared applying
the accounting policies and presentation that were applied in the preparation of
the company's published consolidated financial statements for the year ended 31
December 2009, except for the following change:
IFRS 3 Business Combinations (Revised) and IAS 27 Consolidated and Separate
Financial Statements (Amended)
The Group adopted the revised standards from 1 January 2010. IFRS 3 (Revised)
introduces significant changes in the accounting for business combinations
occurring after this date. Changes affect the valuation of non-controlling
interest, the accounting for transaction costs, the initial recognition and
subsequent measurement of a contingent consideration and business combinations
achieved in stages. These changes impact the amount of goodwill recognised, the
reported results in the period that an acquisition occurs and future reported
results. IAS 27 (Amended) requires that a change in the ownership interest of a
subsidiary (without loss of control) is accounted for as a transaction with
owners in their capacity as owners. Therefore, such transactions no longer give
rise to goodwill, nor give rise to a gain or loss. Furthermore, the amended
standard changes the accounting for losses incurred by the subsidiary as well as
the loss of control of a subsidiary. The changes required by IFRS 3 (Revised)
and IAS 27 (Amended) will affect future acquisitions or loss of control of
subsidiaries and transactions with non-controlling interests. The change in
accounting policy was applied prospectively and had no material impact on
earnings per share or the results for the period ended 30 June 2010.
The preparation of condensed consolidated interim financial statements in
conformity with IFRSs requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and reported
amounts of assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the results
for which form the basis of making the judgements about carrying values of
assets and liabilities that are not readily available from other sources. Actual
results may differ from these estimates.
The principal risks and uncertainties are consistent with those disclosed in
preparation of the Group's annual financial statements for the year ended 31
December 2009.
2. Business Combinations
Acquisition of Xopus B.V.
On 29 June 2010 the Group acquired 100% of the share capital of Xopus B.V., an
unlisted company based in the Netherlands. The principal activity of Xopus B.V.
is the provision of online XML editing.
The total cost of the combination comprises EUR1.5 million (GBP1.2 million) and
was funded from the Group's existing cash resources.
The provisional fair value of the identifiable assets and liabilities of Xopus
B.V. as at the date of acquisition were:
+---------------------------------------+---------+-------------+
| | Book | Provisional |
| | value | fair value |
| | | to |
| | | Group |
+---------------------------------------+---------+-------------+
| | Unaudited |
+---------------------------------------+-----------------------+
| | GBP'000 | GBP'000 |
+---------------------------------------+---------+-------------+
| Intangible assets | - | 510 |
+---------------------------------------+---------+-------------+
| Property, plant and equipment | 18 | 18 |
+---------------------------------------+---------+-------------+
| Cash and cash equivalents | 298 | 298 |
+---------------------------------------+---------+-------------+
| Trade receivables | 52 | 52 |
+---------------------------------------+---------+-------------+
| Other receivables | 14 | 14 |
+---------------------------------------+---------+-------------+
| Trade payables | - | - |
+---------------------------------------+---------+-------------+
| Other payables | (548) | (548) |
+---------------------------------------+---------+-------------+
| Deferred tax liabilities | - | (128) |
+---------------------------------------+---------+-------------+
| Net (liabilities) / assets | (166) | 216 |
+---------------------------------------+---------+-------------+
| Provisional Goodwill arising on | | 1,015 |
| acquisition | | |
+---------------------------------------+---------+-------------+
| | | 1,231 |
+---------------------------------------+---------+-------------+
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 |
| | | |
| | | |
+------------------------------------------+--------+---------+
| | | |
+------------------------------------------+--------+---------+
| Fair value of deferred consideration | | 231 |
+------------------------------------------+--------+---------+
| Cash paid to shareholders | | 1,000 |
+------------------------------------------+--------+---------+
| Total cash payable | | 1,231 |
+------------------------------------------+--------+---------+
| | | |
+------------------------------------------+--------+---------+
| Cash outflow on the acquisition: | | |
+------------------------------------------+--------+---------+
| Net cash and cash equivalents acquired | | 298 |
| with the subsidiary | | |
+------------------------------------------+--------+---------+
| Total cash paid | | (1,000) |
+------------------------------------------+--------+---------+
| Net cash outflow | | (702) |
+------------------------------------------+--------+---------+
| | | |
+------------------------------------------+--------+---------+
The maximum deferred consideration is GBP1.6 million. The fair value has been
calculated at GBP0.2 million and under IFRS 3 (revised) any re-measurement will
be recognised in the income statement.
From the date of acquisition Xopus B.V. has contributed GBPnil of revenue and a
profit of GBPnil to the net profit after tax of the Group. If the combination
had taken place at the beginning of the year, the profit for the Group would
have been GBP9.6 million and revenue from continuing operations would have been
GBP94.7 million. Included in the GBP1.0 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.
Provisional Fair value of XyEnterprise Inc. and Fredhopper B.V.
There have been no changes to the provisional fair value of the identifiable
assets and liabilities of XyEnterprise Inc. during the reporting period. The 12
month period for making changes to provisional fair values elapsed in June 2010.
There have been no changes to the provisional fair values of the identifiable
assets and liabilities of Fredhopper Group B.V. during the reporting period.
The 12 month period for making changes to provisional fair values remains open
until December 2010.
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 technologies 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. The new
acquisition, Xopus B.V., is included within one of these segments.
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.
Six months ended 30 June 2010 (unaudited)
+--------------+----------+--------------+--------------+--------------+---------+
| | Language | Language | Content | Adjustments* | Total |
| | Services | Technologies | Management | | |
| | | | Technologies | | |
+--------------+----------+--------------+--------------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------+----------+--------------+--------------+--------------+---------+
| | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| External | 58,987 | 14,567 | 20,946 | - | 94,500 |
| revenue | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Internal | - | - | - | - | - |
| revenue | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Total | 58,987 | 14,567 | 20,946 | - | 94,500 |
| revenue | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Depreciation | 572 | 263 | 222 | - | 1,057 |
+--------------+----------+--------------+--------------+--------------+---------+
| Segment | 11,756 | 1,349 | 3,429 | (202) | 16,332 |
| profit | | | | | |
| before tax | | | | | |
| and | | | | | |
| amortisation | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| Amortisation | | | | | 3,476 |
+--------------+----------+--------------+--------------+--------------+---------+
| Profit | | | | | 12,856 |
| before tax | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
*Deferred compensation relating to acquisitions
Six months ended 30 June 2009 (unaudited)
+--------------+----------+--------------+--------------+----------+
| | Language | Language | Content | Total |
| | Services | Technologies | Management | |
| | | | Technologies | |
+--------------+----------+--------------+--------------+----------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------+----------+--------------+--------------+----------+
| | | | | |
+--------------+----------+--------------+--------------+----------+
| External | 53,970 | 14,664 | 14,659 | 83,293 |
| revenue | | | | |
+--------------+----------+--------------+--------------+----------+
| Internal | - | - | - | - |
| revenue | | | | |
+--------------+----------+--------------+--------------+----------+
| Total | 53,970 | 14,664 | 14,659 | 83,293 |
| revenue | | | | |
+--------------+----------+--------------+--------------+----------+
| Depreciation | 551 | 207 | 145 | 903 |
+--------------+----------+--------------+--------------+----------+
| Segment | 9,968 | 1,658 | 2,893 | 14,519 |
| profit | | | | |
| before tax | | | | |
| and | | | | |
| amortisation | | | | |
+--------------+----------+--------------+--------------+----------+
| Amortisation | | | | 2,740 |
+--------------+----------+--------------+--------------+----------+
| Profit | | | | 11,779 |
| before tax | | | | |
+--------------+----------+--------------+--------------+----------+
Year ended 31 December 2009 (audited)
+--------------+----------+--------------+--------------+---------+
| | Language | Language | Content | Total |
| | Services | Technologies | Management | |
| | | | Technologies | |
+--------------+----------+--------------+--------------+---------+
| | 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 | | | | |
+--------------+----------+--------------+--------------+---------+
Segment assets:
+--------------+----------+--------------+--------------+--------------+---------+
| | Language | Language | Content | Adjustments | Total |
| | Services | Technologies | Management | and | |
| | | | Technologies | eliminations | |
+--------------+----------+--------------+--------------+--------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+--------------+----------+--------------+--------------+--------------+---------+
| | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| At 30 June | 51,827 | 56,621 | 70,498 | (1)62,131 | 241,077 |
| 2010 | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| At 30 June | 44,841 | 58,572 | 66,648 | (2)38,438 | 208,499 |
| 2009 | | | | | |
| (restated) | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
| At 31 | 48,266 | 58,312 | 76,324 | (3)52,783 | 235,685 |
| December | | | | | |
| 2009 | | | | | |
+--------------+----------+--------------+--------------+--------------+---------+
(1) Segment assets do not include cash (GBP55,482,000), Corporation Tax
(GBP898,000) and Deferred Tax (GBP5,751,000).
(2) Segment assets do not include cash (GBP32,919,000), Corporation Tax
(GBP1,330,000) and Deferred Tax (GBP4,189,000).
(3) Segment assets do not include cash (GBP46,160,000), Corporation Tax
(GBP1,002,000) and Deferred Tax (GBP5,621,000).
The split between Language Technologies and Content Management Technologies
segment assets for the period ended 30 June 2009 has been restated to reflect
the split of segment assets determined at the end of December 2009 when three
segments were reported for the first time.
Revenue by geographical destination was as follows:
+--------------------------------+-----------+-----------+----------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year to |
| | to | to | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+-----------+-----------+----------+
| | 8,327 | 6,218 | 14,029 |
| United Kingdom | | | |
+--------------------------------+-----------+-----------+----------+
| Rest of Europe | 32,955 | 33,292 | 67,000 |
+--------------------------------+-----------+-----------+----------+
| USA | 33,049 | 30,814 | 63,151 |
+--------------------------------+-----------+-----------+----------+
| Rest of North America | 9,042 | 6,415 | 14,306 |
+--------------------------------+-----------+-----------+----------+
| Rest of the World | 11,127 | 6,554 | 13,392 |
+--------------------------------+-----------+-----------+----------+
| | 94,500 | 83,293 | 171,878 |
+--------------------------------+-----------+-----------+----------+
4. Operating profit
+--------------------------------+-----------+-----------+----------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year to |
| | to | to | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+-----------+-----------+----------+
| Is stated after | | | |
| charging/(crediting): | | | |
+--------------------------------+-----------+-----------+----------+
| | | | |
+--------------------------------+-----------+-----------+----------+
| Research and development | 6,381 | 4,774 | 11,043 |
| expenditure | | | |
+--------------------------------+-----------+-----------+----------+
| Bad debt (credit) / charge | (102) | 84 | (374) |
+--------------------------------+-----------+-----------+----------+
| Depreciation of owned and | 1,057 | 903 | 1,980 |
| leased assets | | | |
+--------------------------------+-----------+-----------+----------+
| Amortisation of intangibles | 3,476 | 2,740 | 5,808 |
+--------------------------------+-----------+-----------+----------+
| Operating lease rentals for | 440 | 319 | 912 |
| plant and machinery | | | |
+--------------------------------+-----------+-----------+----------+
| Operating lease rentals for | 2,659 | 2,518 | 5,636 |
| land and buildings | | | |
+--------------------------------+-----------+-----------+----------+
| Operating lease rentals | - | (75) | (75) |
| received for land and | | | |
| buildings | | | |
+--------------------------------+-----------+-----------+----------+
| Net foreign exchange | (1,101) | (542) | 838 |
| differences | | | |
+--------------------------------+-----------+-----------+----------+
| Gain on foreign exchange | (337) | (226) | (352) |
| derivatives | | | |
+--------------------------------+-----------+-----------+----------+
5. Taxation
+--------------------------------+-----------+-----------+----------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year to |
| | to | to | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | GBP'000 | GBP'000 | GBP'000 |
+--------------------------------+-----------+-----------+----------+
| UK corporation tax: | | | |
+--------------------------------+-----------+-----------+----------+
| UK current tax on income for | 746 | 578 | 1,755 |
| the period | | | |
+--------------------------------+-----------+-----------+----------+
| Adjustments in respect of | - | - | - |
| prior periods | | | |
+--------------------------------+-----------+-----------+----------+
| | 746 | 578 | 1,755 |
+--------------------------------+-----------+-----------+----------+
| Foreign tax: | | | |
+--------------------------------+-----------+-----------+----------+
| Current tax on income for the | 3,283 | 2,212 | 4,714 |
| period | | | |
+--------------------------------+-----------+-----------+----------+
| Adjustments in respect of | - | - | 123 |
| prior periods | | | |
+--------------------------------+-----------+-----------+----------+
| | 3,283 | 2,212 | 4,837 |
+--------------------------------+-----------+-----------+----------+
| Total current taxation | 4,029 | 2,790 | 6,592 |
+--------------------------------+-----------+-----------+----------+
| | | | |
+--------------------------------+-----------+-----------+----------+
| Deferred taxation: | | | |
+--------------------------------+-----------+-----------+----------+
| Origination and reversal of | (551) | 344 | (532) |
| timing differences | | | |
+--------------------------------+-----------+-----------+----------+
| Deferred tax (debit)/credit | (245) | (13) | |
| for share options taken to | | | - |
| equity | | | |
+--------------------------------+-----------+-----------+----------+
| Total deferred taxation | (796) | 331 | (532) |
+--------------------------------+-----------+-----------+----------+
| Tax Expense | 3,233 | 3,121 | 6,060 |
+--------------------------------+-----------+-----------+----------+
A tax debit in respect of income tax charge on foreign currency translation
differences on foreign currency loans to foreign subsidiaries was recognised in
the statement of other comprehensive income of GBP449,000 in the six months to
June 2010 (June 2009: GBPnil; December 2009 credit of GBP847,000).
A tax credit in respect of share based compensation for current taxation of
GBP452,000 (June 2009: GBPnil; December 2009: GBP635,000) has been recognised in
the statement of changes in equity in the year. A tax charge in respect of share
based compensation for deferred taxation of GBP245,000 (June 2009: GBP13,000;
December 2009: GBP220,000) has been recognised in the statement of changes in
equity in the year.
Due to the requirements of IAS 12, in conjunction with IFRS 2, the Schedule 23
tax credit for share options exercised and deferred taxation on unexpired
options have partly been recorded in equity. For the 6 months ended 30 June 2010
this has the effect of increasing the effective tax rate by approximately 1.6%
(at 30 June 2009:-0.1%; at 31 December 2009: +1.7%).
6. Earnings per share
+------------------------------+-----------+-----------+----------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year to |
| | to | to | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+-----------+-----------+----------+
| Profit for the period | 9,623 | 8,649 | 17,944 |
| attributable to equity | | | |
| holders of the parent | | | |
+------------------------------+-----------+-----------+----------+
| | | | |
+------------------------------+-----------+-----------+----------+
| | m | m | m |
+------------------------------+-----------+-----------+----------+
| Basic weighted average | 77.4 | 75.8 | 76.2 |
| number of shares (million) | | | |
+------------------------------+-----------+-----------+----------+
| Employee share options and | 2.5 | 2.9 | 2.5 |
| shares to be issued | | | |
| (million) | | | |
+------------------------------+-----------+-----------+----------+
| Diluted weighted average | 79.9 | 78.7 | 78.7 |
| number of shares (million) | | | |
+------------------------------+-----------+-----------+----------+
| | | | |
+------------------------------+-----------+-----------+----------+
| | | | |
| Adjusted earnings per share: | | | |
+------------------------------+-----------+-----------+----------+
| | Unaudited | Unaudited | Audited |
| | 6 months | 6 months | Year to |
| | to | to | 31 |
| | 30 June | 30 June | December |
| | 2010 | 2009 | 2009 |
| | GBP'000 | GBP'000 | GBP'000 |
+------------------------------+-----------+-----------+----------+
| Profit for the period | 9,623 | 8,649 | 17,944 |
| attributable to equity | | | |
| holders of the parent | | | |
+------------------------------+-----------+-----------+----------+
| Amortisation of intangible | 3,476 | 2,740 | 5,808 |
| fixed assets | | | |
+------------------------------+-----------+-----------+----------+
| Less: deferred tax benefit | (973) | (760) | (1,620) |
| associated with amortisation | | | |
| of intangible fixed assets | | | |
+------------------------------+-----------+-----------+----------+
| Adjusted profit for the | 12,126 | 10,629 | 22,132 |
| period attributable to | | | |
| equity holders of the parent | | | |
+------------------------------+-----------+-----------+----------+
| | | | |
+------------------------------+-----------+-----------+----------+
| | m | m | m |
+------------------------------+-----------+-----------+----------+
| Basic weighted average | 77.4 | 75.8 | 76.2 |
| number of shares (million) | | | |
+------------------------------+-----------+-----------+----------+
| Diluted weighted average | 79.9 | 78.7 | 78.7 |
| number of shares (million) | | | |
+------------------------------+-----------+-----------+----------+
| | | | |
+------------------------------+-----------+-----------+----------+
| | Pence | Pence | Pence |
+------------------------------+-----------+-----------+----------+
| Adjusted earnings per | 15.67 | 14.02 | 29.05 |
| ordinary share - basic | | | |
| (pence) | | | |
+------------------------------+-----------+-----------+----------+
| Adjusted earnings per | 15.18 | 13.50 | 28.11 |
| ordinary share - diluted | | | |
| (pence) | | | |
+------------------------------+-----------+-----------+----------+
7. Interest-bearing loans
The Group met the cost of acquisition of Xopus B.V. of GBP1.2 million from
existing cash reserves. The undrawn committed borrowing facility is GBP20.0
million (December 2009: GBP20.0 million).
8. Share-based payments
On 12 April 2010, 570,305 Long Term Incentive Plan (LTIP) shares were awarded
and on 4 June 2010, 187,995 stock options were awarded to certain key senior
executives and employees of the SDL Group. The exercise price of the options of
453.80 pence represents the mid market price on the day before grant.
9. Derivatives and other financial instruments
At 30 June 2010 the Group had no derivative financial instruments. At 30 June
2009, the Group had forward contracts to sell $2 million each month through to
28 August 2009 at between $1.6142 to $1.6152 to GBP1.00. As at 30 June 2009 the
Group's hedging contracts were valued at an asset of GBP44,355. The exchange
gains on these contracts were recognised in the income statement during the
period as the hedging contracts do not qualify for hedge accounting.
10. General notes
The financial information in these interim statements does not constitute
statutory accounts as defined in Section 404 of the Companies Act 2006. The
financial information for the year ended 31 December 2009 is based on the
statutory accounts for the financial year ended 31 December 2009. Those
accounts, upon which the auditors issued an unqualified opinion in accordance
with section 495 Companies Act 2006 and did not contain a statement under
section 498 (2) or (3) Companies Act 2006, have been delivered to the registrar
of companies. The interim financial statements were approved by the Board of
Directors on 2 August 2010.
11. Events after the statement of financial position date
On 23 July 2010, the Group acquired 100% of Language Weaver (an unlisted company
based in the United States of America) for $40.5 million (GBP26.9 million)
funded from the Group's existing cash reserves. The principal activity of
Language Weaver is the provision of machine translation based Language
Technologies. The Chairman's statement describes the primary reasons for the
business combination. Additional disclosures required under IFRS 3 (Revised)
will be included in the 31 December 2010 annual financial statements once the
initial accounting for the business combination has been finalised.
There are no other known events occurring after the statement of financial
position date that require disclosure.
Responsibility Statement by the Management Board
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the EU;
· the interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the financial
year and their impact on the condensed set of financial statements; and a
description of the principal risks and uncertainties for the remaining six
months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
For and on behalf of the Board
John Hunter
Independent Review Report to SDL plc
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2010 which comprises the Interim Condensed Consolidated Income Statement,
Interim Condensed Consolidated Statement of Comprehensive Income, Interim
Condensed Consolidated Statement of Financial Position, Interim Condensed
Consolidated Statement of Changes in Equity, Interim Condensed Consolidated
Statement of Cash Flows, and the related explanatory notes. We have read the
other information contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material inconsistencies with
the information in the condensed set of financial statements.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the DTR of the UK FSA.
The annual financial statements of the group are prepared in accordance with
IFRSs as adopted by the EU. The condensed set of financial statements included
in this half-yearly financial report has been prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2010 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK
FSA.
P Gresham
for and on behalf of KPMG Audit Plc
Chartered Accountants
8 Salisbury Square
London
EC4Y 8BB
This information is provided by RNS
The company news service from the London Stock Exchange
END
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