TIDMSDL
RNS Number : 7512Z
SDL PLC
12 March 2013
12 March 2013
SDL PLC
Preliminary results for the year ended 31 December 2012
SDL today reports a year of solid organic revenue growth overall
for the Group, and good progress on the integration of the Alterian
acquisition
SDL plc ("SDL" or "the Group"), the leading provider of Global
Information Management (GIM) solutions, announces its audited
preliminary results for the year ended 31 December 2012.
2012 2011 %
GBP'000 GBP'000 Change
Income Statement:
Revenue 269,323 229,001 +18%
Profit before tax and amortisation
of intangibles 35,517 39,664 -10%
Profit before tax 27,397 33,761 -19%
Earnings per ordinary share - basic
(pence) 26.12 32.72 -20%
Adjusted earnings per ordinary share
- basic (pence) 33.95 38.23 -11%
Proposed final dividend (per ordinary
share) - pence 6.1 5.8 +5%
Operational highlights
-- Headline revenue growth of 17.6% driven by underlying organic
growth and strong Alterian contribution.
-- Performance across the three segments at constant currency:
o Language Services revenue grew by 12.4%, driven by strong
sales and marketing execution.
o Content Management Technologies revenue declined
marginally.
o Language Technologies revenue business was flat.
-- Geographically, headline growth in Asia was particularly
strong at 46%, North America was 12%, with Europe (including the
UK) increasing by 17%.
-- Significant new client wins during the year included Barnes
& Noble, Husqvarna, KONE, Majestic Wines and Purina.
-- Net cash of GBP6.3 million following the GBP70 million
acquisition of Alterian in January 2012.
-- In addition to the sales and marketing investment announced
in November 2012 a further GBP4 million to GBP5 million of sales
and marketing and R&D will be invested in 2013 to create a more
robust platform for future growth.
-- Final dividend of 6.1 pence per ordinary share, a 5.2%
increase over the dividend paid in the previous year reflecting our
confidence in the outlook.
Commenting on these results, Mark Lancaster, Executive Chairman
and Chief Executive Officer said today:
"Although the underlying organic growth for the group was
strong, 2012 was a difficult year for SDL. As a result of under
investment in the business in 2011 and 2012 performance has been
impacted, particularly in the technology segment. Despite this we
remain confident in our outlook for sales in 2013 and, as announced
in November 2012, we will make significant discretionary sales,
marketing and R&D investments in 2013 to return SDL to strong
technology growth. The quantum of the total investment will be GBP8
million to GBP9 million. This will enhance technology revenue
growth in 2013 but will reduce profits for 2013. These investments
will take SDL to a new level, creating a solid platform to deliver
significant sustained revenue growth and profitability to 2014 and
beyond."
For further information please contact:
SDL plc Tel: 01628 410 127
Mark Lancaster, Executive Chairman and
Chief Executive Officer
Matthew Knight, Chief Financial Officer
FTI Consulting Tel: 020 7831 3113
Edward Bridges / Jon Snowball /Emma Appleton
About SDL
SDL enables global businesses to enrich their customers'
experience through the entire customer journey. SDL's technology
and services help brands to predict what their customers want and
engage with them across multiple languages, cultures, channels and
devices. SDL has over 1,500 enterprise customers, 400 partners and
a global infrastructure of 70 offices in 38 countries. 42 out of
the top 50 brands work with SDL. For more information, visit
www.sdl.com.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S STATEMENT
Dear Shareholder
Summary performance
SDL today reports another year of solid organic revenue growth
for the Group, and good progress on the integration of the Alterian
acquisition. As a result of under investment in sales, marketing
and infrastructure in 2011 and 2012, SDL's performance in the
technology segment was disappointing (as announced in November
2012). Nevertheless revenue for the year was GBP269.3 million
(2011: GBP229.0 million). Profit before taxation and amortisation
of intangible assets ("PBTA") was GBP35.5 million (2011: GBP39.7
million). Gross cash in the business at the year end was GBP28.5
million whilst net cash amounted to GBP6.3 million (2011: GBP70.4
million), following the GBP70 million acquisition of Alterian in
January 2012.
Headline revenue growth of 17.6% can be attributed to underlying
organic growth of 6.7%, 12.4% growth from acquisitions and a 1.5%
decrease arising from foreign exchange effects. Geographically,
growth in Asia was 46%, North America was 12%, with Europe
(including the UK) increasing by 17%. The cash generated from
operations for the Group was GBP25.8 million, including one-off
outflows and working capital movements of GBP5.7 million relating
to the acquisition of Alterian that was completed in the first half
of 2012. Operating cash flows returned to SDL's normal, strong
levels with PBTA conversion of 125% in the second half, or GBP18.8
million in absolute terms (excluding capital expenditure).
Segmentally, we were pleased with our Language Services organic
revenue growth of 12.4% due primarily to operational, sales and
marketing execution. Services PBTA contribution was GBP23.2
million, down from last year due to investment in growth and some
large US contracts with lower margins. Excluding acquisitions, we
were disappointed with our technology revenues that declined 1.6%
organically and contributed GBP10.7 million to Group PBTA in the
year. This was primarily due to inadequate investment and execution
into sales and marketing in 2011 and 2012 coupled with difficult
economic conditions, nevertheless technology bookings and revenue
increased significantly in the last quarter.
Alterian Acquisition
The Alterian acquisition has outperformed initial expectations
with a revenue and PBTA of GBP28.4 million and GBP2.3 million
respectively. This outperformance is attributable to a combination
of high levels of customer renewals, integration savings, and
strong new business sales of our marketing analytics suite.
Investment into research and development was significantly
increased in 2012 and will continue through 2013. A swift
operational integration of Alterian delivered stability to
Alterian's clients, partners and staff. Whilst Alterian's Web
Content business integrated into SDL's Content Management
Technologies segment, Alterian's Campaign Management, Analytics and
Social Intelligence businesses have been combined in a new
reporting segment. We are very pleased with the cultural fit of
Alterian staff, who have integrated well into the combined
organisation.
Market Opportunity
We offer our customers a compelling solution to meet the present
and future challenges of customer engagement. This is known by our
industry as Customer Experience Management or Digital Experience
Marketing. Essentially SDL believes that for companies to succeed
and prosper in this digital world they need to have an integrated
technology stack that allows them to engage with their customers.
It has been, for the past ten years, our vision to provide
integrated technology solutions and services to meet this
challenge. We have methodically invested both organically and by
acquisition to create an integrated technology stack to deliver the
fundamentals a business needs to enhance revenue growth and manage
customer engagement. The key components required to engage
effectively with customers are:
- Analytics and Social Intelligence - to listen to what customers are saying and doing.
- Web Content Management - to create and manage content that customers consume.
- Structured Content Management - to deliver information online about products they use.
All this content needs to be available on multiple devices -
mobile phones, laptops, tablets and personal computers in the right
format for that device. It needs to be the right format and in the
right media and customers need to be targeted with the right
information. Hence we have also invested in Targeting technology,
Media Management and Mobile technology. Most importantly a
company's sales universe is the world. The world communicates in
multiple languages, SDL's heritage is language, we are the only
company that can truly deliver Global Customer Experience
Management solutions.
We are delighted to have expanded our business, entering
strategic new relationships with global enterprises including
Nordea Bank, Migros, Abercrombie & Fitch and Estée Lauder, and
growing our account presence at Bose Corporation, Ford Motor
Company and Toys R Us Inc with multiple solution cross-sales. The
combination of SDL's leading technology, an outstanding customer
base and improving distribution capabilities means we are confident
of our future success.
Vision and Strategy
With the acquisition and successful integration of Alterian's
leading Marketing, Analytics and Social Intelligence software into
SDL's Global Information Management technology stack, the Group
continues to realize its vision and strategy as a leading player in
Customer Experience Management.
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