TIDMSDL
RNS Number : 5168C
SDL PLC
18 March 2014
18 March 2014
SDL PLC
Preliminary results for the year ended 31 December 2013
Our transformation programme has set the foundations and
structure to better embrace the market opportunity and deliver
solutions for Customer Experience Management
SDL plc ("SDL" or "the Group"), a leader in Customer Experience
Management, announces its audited preliminary results for the year
ended 31 December 2013.
2013 2012
GBPm GBPm
Income Statement:
Revenue 266.1 269.3
Profit before tax and amortisation
of intangibles and one-off costs 8.2 37.0
(Loss)/ Profit before tax (24.4) 27.4
Earnings per ordinary share - basic
(pence) -34.78 26.12
Adjusted earnings per ordinary share
- basic (pence) 2.57 35.22
Proposed final dividend (per ordinary
share) - pence Nil 6.1
Summary:
-- Language services: recovery to 1.7% revenue growth in the
second half accompanied by return to normal PBTA margin.
-- Content & Analytic Technologies and Language
Technologies: in combination broadly flat in terms of revenues but
losses incurred due to previously announced significant investment
made in R&D and sales & marketing.
-- New customer wins in the period include: Acer, Adidas, Haier,
Skype, Turkish Airlines and VMware
-- Significant restructuring of the business to properly align with market opportunity
-- Implemented large scale global systems to manage the business more effectively
-- Several proven industry leaders hired to fortify the senior executive team
-- Post period end, we launched SDL Customer Experience
Cloud(TM), a unified suite of offerings to help marketers create
and deliver seamless global customer experiences across all
channels, devices and languages
-- No final dividend due to the restructuring and investment costs in 2013
Outlook
The foundations and infrastructure are in place. Throughout
2013, the hard decisions and investments have been made. However,
there will be a lag before the restructuring and investments take
full effect. As we move through 2014, we expect the business to
gain bookings, revenue and profit momentum as the new structure and
initiatives take effect. SDL has a solid foundation of best of
breed integrated technology and, we have put in place an
organisational structure to deliver it. This gives us great deal of
confidence we will return to the levels of profitability and exceed
the levels of technology growth we had in the past.
Note: Adjusted earnings per share is before amortisation of
intangibles and one-off costs
Mark Lancaster, Chief Executive Officer, commented:
"In 2013 we undertook some hard but essential changes that will
provide the impetus for our future success. SDL's structure is now
more aligned to the market opportunity and I believe that we now
have the foundations in place to capture the opportunities in
customer experience management.
Early signs show that the decision to invest is strengthening
our business, and we enter a new financial year with an executive
leadership team with the right levels of experience and expertise
and a go-to-market approach built on the foundations of enhanced
global systems.
We expect the market to continue to evolve rapidly over the next
three years, as consumers demand better customer engagement through
hand held devices and general online access to relevant
information. As we move through 2014, we expect the business to
gain bookings momentum in the latter half of the year as the new
structure and initiatives take effect."
For further information please contact:
SDL plc Tel: 01628 410 127
Mark Lancaster, Chief Executive Officer
Dominic Lavelle, Chief Financial Officer
FTI Consulting Tel: 020 3727 1000
Edward Bridges / Jon Snowball / Emma
Appleton
About SDL
SDL (LSE: SDL) allows companies to optimize their customers'
experience across the entire buyer journey. Through its web content
management, analytics, social intelligence, campaign management and
translation services, SDL helps organizations leverage data-driven
insights to understand what their customers want, orchestrate
relevant content and communications, and deliver engaging and
contextual experiences across languages, cultures, channels and
devices.
SDL has over 1,500 enterprise customers, over 400 partners and a
global infrastructure of 70 offices in 38 countries. We also work
with 72 of the top 100 brands. For more information, please visit
http://www.sdl.com.
Chairman's Statement
Although the financial performance of SDL in 2013 was not as we
anticipated at the beginning of the year as bookings growth did not
materialise as quickly as we had planned following our investments
in sales and marketing, I believe that we have made significant
progress in restructuring the business in order to ensure long-term
value creation for our shareholders.
Mark Lancaster returned to the role of Chief Executive Officer
at the end of 2012. Although we initially expected that this would
be an interim appointment, by the end of the first quarter, it
became apparent that Mark's leadership would be key in effecting a
more fundamental restructuring of the organisation. Consequently,
the Board felt that it would be inappropriate for Mark to stay in
the roles of both Chairman and Chief Executive Officer. During the
second quarter, the Board ran a process to find a new Chairman and
that resulted in me taking on that role at the beginning of
July.
I believe that it is important that the Board has the requisite
skills and experience to support Mark and his executive team in
delivering profit and growth, in order to enable long-term value
creation for our shareholders. Therefore, whilst Mark set about the
vital task of restructuring the Executive team, I have taken the
opportunity to look at the structure and capabilities of the Board.
This has resulted in recruiting two new Non-Executive
Directors.
I am pleased to welcome Alan McWalter to the Board. He joined us
in March 2014. Alan has a wealth of valuable experience and has
succeeded me as Senior Independent Director. He will also serve on
the Audit and Remuneration Committees. We have also announced that
Glenn Collinson will join SDL as a non-executive director and
Chairman of the Remuneration Committee from June 2014. He will also
sit on the Audit Committee. Glenn has significant experience as
both an Executive and Non-executive Director in technology
businesses.
Having served on the Board of SDL for nearly 9 years, Joe
Campbell has informed the Board that he will not stand for
re-election at our AGM in April. On behalf of the Board, I would
like to thank Joe for his valuable contribution to the business
over many years. We also welcomed Dominic Lavelle to the Board as
Chief Financial Officer replacing Matthew Knight who stepped down
in November. We thank Matthew for his contribution. Dominic has 25
years of financial experience and proven credentials in turnaround
situations.
Under Mark's leadership, the executive team has taken some bold
steps in 2013, making significant changes in the operational
structure to align the business with the significant market
opportunity and laying the foundations for sustainable future
growth. This has meant evolving from a business unit structure to
an integrated global business.
In 2013, the executive management team began to execute a
long-term go-to-market plan that has required significant changes
to the executive leadership team including the recruitment of
individuals with the skills and experience to drive the business
forward. Consequently, 2013 has seen a number of key hires into the
business and also a number of departures. The Board believes that
the investments being made and the initiatives being undertaken are
thoughtful and considered. Early signs show that the decision to
invest in infrastructure and management is strengthening our
business.
The Board remains very confident in the operational cash
generation of the business. The Board has previously communicated a
progressive dividend policy whereby dividends would be set based
upon the evolution of our profits. However, as a result of the
restructuring and investment costs in 2013, the Board will not be
recommending a final dividend to the Annual General Meeting for
2013.
In many respects, 2013 has been a very difficult year for SDL. I
believe it has also been a year when we have executed some
fundamental changes to the business, which we believe are essential
for our future success. These changes have impacted not only the
Executive team, but also the entire workforce of SDL. I have been
particularly impressed by the character, enthusiasm and energy of
our employees during a period of rapid change. On behalf of the
Board, I would like to record our thanks to them for their
commitment, passion and hard work.
David Clayton
Chairman
CEO Review
This has without doubt been the toughest year SDL has ever had.
Although the financial performance of SDL in 2013 was significantly
below 2012, we feel the investments and restructuring we have made
in 2013 set SDL up for a very prosperous future. Revenues were
GBP266.1 million (2012: GBP269.3 million). Profit before taxation,
amortisation of intangible assets and "one off" costs ("PBTA") was
GBP8.2 million (2012: GBP37.0 million). The loss before tax for the
year was GBP24.4 million. The reduction in profits was due
primarily to planned sales and marketing investments, significant
restructuring, slightly reduced technology licence revenues as well
as weaker first half margins in Language Services. The cash
generated from operations was GBP15.8 million (2012: GBP25.8
million). Gross cash in the business at the year-end was GBP18.2
million (2012: GBP28.5 million) whilst net debt was GBP1.8 million
(2012: cash GBP6.3 million).
Following my return to the business as CEO in late 2012, we have
made some significant and necessary changes. The market has evolved
significantly over the last 3 years and SDL needed to make
structural changes to properly align the company with the market
opportunity.
Considering the massive changes we have made to SDL's
operational and management structure to align with the market
opportunity, we are now in a great position to take advantage of
our fast-evolving digital world. I believe we will probably look
back on this year as being the most important in SDL's history,
setting the foundations and structure to embrace this market
opportunity. We had some great customer wins including Acer,
Adidas, Haier, Nissan, Skype, Turkish Airlines and VMware and
completely recovered our Language Service business margins to be
one of the most efficient in the world due to our investment in
technology, process and infrastructure.
We have restructured the business from the ground up, creating a
structure that provides a holistic solution to the market's needs,
not just from the technology solutions, where we have always been
strong, but also from a go to market sales and services delivery
model. We have changed our structure from a product line focused
model to that of a customer centric business model. During the
second half of 2013, SDL hired several experienced technology
executives to the company.
-- We have aligned the sales force under a Chief Revenue
Officer; Bernadette Nixon, an experienced software sales leader. We
now have a sales force with an aligned execution model that will
provide greater coverage and better leverage and solutions for our
customers.
-- Research and Development is led by Dennis Van der Veeke,
providing better product integration and technology aligned with
market needs
-- We put in place a Chief Operating Officer; Jean-Pierre Dekker
to provide a single customer centric go to market and delivery
function
-- Marketing is now centralised under Paige O'Neil, Chief
Marketing Officer, to enhance our brand and go to market
delivery
-- Dominic Lavelle has been hired as CFO with 25 years of financial experience
The new hires are proven industry leaders in their field that
understand how to consolidate and integrate complementary
technologies to deliver business benefits. They join Dominic Kinnon
who heads up language solutions, and, as a team, are jointly
charged with delivering on SDL's customer experience management
vision.
Of equal importance, we have implemented a number of large scale
global systems to help manage the business more effectively. These
include a new global HR system, CRM and financial systems. The
projects were kicked off early 2013 and are expected to be fully
operational by the end of 2014.
We rolled out a number of training and realignment programs in
the last quarter of 2013 and these will continue in the first half
of 2014 to ensure complete alignment throughout the whole
organisation.
Throughout the organisation, this has created new opportunities,
allowing us to bring in new talent and right size the organisation,
creating cost savings and efficiencies.
The technology
Over the last 10 years, SDL has acquired, and then further
developed discrete technology solutions to create a single
integrated technology. In January2014, we launched the SDL Customer
Experience Cloud(TM), a unified suite of offerings to help
marketers create and deliver seamless global customer experiences
across all channels, devices and languages.
The SDL Customer Experience Cloud integrates web content
management, campaign management, social intelligence, customer
analytics, e-commerce, language solutions and document management.
The technology suite empowers organizations from marketing through
to customer support to understand, create, manage and deliver
contextually relevant customer experiences that drive better
marketing decisions, e-commerce success and long-term customer
engagement.
The market
As the digital world continues to grow exponentially, both the
opportunity and challenges this presents to businesses is
unprecedented and will require companies to change the way they
operate. The amount of information relating to products and
services that is rapidly becoming available in our digital world is
both enormous and valuable. However, to consume this information
and filter the value to gain insights of what customers find
attractive and then orchestrate a business to deliver the right
contextual information at the right time across all channels can
only be solved with technology. SDL's goal is to provide businesses
with an integrated suite of technology that allows companies to
engage with their customers by gaining insights into their
customers, orchestrating the disparate silos in their business to
then provide the best possible information to their customers
across the whole customer journey from sales through to
support.
Competition in the Customer Experience Management space has
intensified; there has been a considerable amount of M&A
activity in the past two years with the larger IT players, such as
Oracle, Adobe, Salesforce, HP and IBM making similar technology-led
acquisitions that SDL made over the last six years. We feel
comfortable with our positioning and differentiation. Our focus is
to provide an integrated suite of technology that is focused on
customer engagement versus traditional customer relationship
management platforms that are focused more on back office
management as opposed to revenue-driving customer engagement. We
expect the market to continue to evolve rapidly over the next three
years, as consumers demand better customer engagement through hand
held devices and general online access to relevant information.
This, in turn, will force companies to provide relevant information
at all points in the customer life cycle.
Outlook
The foundations and infrastructure are in place. Throughout
2013, the hard decisions and investments have been made. However,
there will be a lag before the restructuring and investments take
full effect. As we move through 2014, we expect the business to
gain bookings, revenue and profit momentum as the new structure and
initiatives take effect. SDL has a solid foundation of best of
breed integrated technology and, we have put in place an
organisational structure to deliver it. This gives us great deal of
confidence we will return to the levels of profitability and exceed
the levels of technology growth we had in the past.
Financial Review
Summary Performance
The Group's performance in the year was significantly below last
year. Revenues were GBP266.1 million (2012: GBP269.3 million).
Profit before taxation, amortisation of intangible assets and
one-off costs ("PBTA") was GBP8.2 million (2012: GBP37.0 million).
The reduction in profits was primarily due to planned sales and
marketing investments and slightly reduced technology licence
revenues, plus weaker first half margins in Language Services.
"One-off" costs of GBP25.1 million comprise: redundancy costs of
GBP2.5 million, historic litigation costs of GBP1.4 million (2012:
GBP1.5 million), onerous lease costs of GBP0.4 million, , other
costs of GBP0.4 million, and an impairment of goodwill of GBP20.4
million in our Content and Analytics Technologies segment. The
impairment is a natural consequence of a disappointing trading year
as this segment delivered 2013 losses of GBP5.5 million.
After these one-off costs, loss before tax was GBP24.4 million
(2012: GBP27.4 million profit).
The cash generated from operations was GBP15.8 million (2012:
GBP25.8 million). Gross cash in the business at the year-end was
GBP18.2 million (2012: GBP28.5 million) whilst net debt was GBP1.8
million (2012: cash GBP6.3 million). Capital expenditure was GBP6.1
million (2012: GBP5.4 million) due to increased investment in SaaS
cloud infrastructure. Tax paid was GBP10.3 million (2012: GBP8.3
million), above the profit and loss tax charge shown in the income
statement primarily due to some prior year tax payments and the
deferred tax credit for intangible asset amortisation which
suppresses the profit and loss charge.
The headline revenue decrease of 1.2% can be attributed to an
underlying organic decline of 3.6%, 1.0% growth from acquisitions
and a 1.4% increase arising from foreign exchange effects.
Geographically, the decline in Asia was 2.2%, North America was
0.2%, with Europe decreasing by 4.3%.
The business continues to benefit from a diverse mix of regions,
industry verticals and customers, limiting the group's exposure to
adverse economic conditions in certain countries and sectors.
Customer concentration continues to reduce with the 20 largest
customer contributing 26% (2012: 27%) of revenue in 2013. No single
customer contributes more than 5% of group revenues.
Performance by Segment
As a result of the restructuring described in the CEO Review,
the Group is now organised into business units based on services
and technology products, and has three reportable segments.
Language Services (contributing GBP150.5 million or 56% of total
revenue and GBP17.6 million of PBTA) (2012: contributing GBP151.1
million or 56% of total revenue and GBP23.2 million of PBTA).
Segment revenue reduced by 0.4% in the year, comprising an
underlying decline of 2.0% at constant currency and a 1.6% gain on
foreign exchange. A weaker performance in the first half, which saw
a half on half headline revenue decline of 2.5%, was turned around
in the second six months of the year where half on half revenue
growth of 1.7% was achieved. A stronger second half was driven by
growth in continental Europe where revenue grew by 7% in the half
or 6% for the year and in Canada where revenue grew by 9% in the
half or 5% for the year.
Segment PBTA margin declined to 11.7%, due to the disappointing
first half. PBTA margin was much improved in this business towards
the end of the year as a result of the wide-reaching efficiency
programme. The second half contributed GBP10.7 million to the PBTA
result for the year at PBTA margin of 13.8%, an improvement on the
9.4% achieved in the first half.
We continue to invest in improving our infrastructure, including
expanding the use of automated translation technology, new workflow
efficiency tooling and other productivity improvement projects.
Adoption of the Intelligent Machine Translation (iMT) solution
across the customer base has increased from 16% to 20%. During the
period we have grown our presence in Poland and India by
approximately 60 heads. We have also established a new translation
network office in Ho Chi Minh in Vietnam, leveraging our existing
presence in this country.
267 new accounts were added globally, which are expected to
contribute to growth in 2014.
New clients in 2013 include Acer, Asus, Carestream, Haier,
Lenovo, Nissan, NTT and Skype.
Content & Analytic Technologies (contributing GBP79.4
million or 30% of revenue and losses of GBP5.5 million PBTA) (2012:
contributing GBP79.1 million or 29% of revenue and GBP10.5 million
PBTA).
This segment comprises Web Content Management Solutions,
eCommerce technologies and Structured Content Technologies, plus
Marketing Analytics, Campaign Management and Social Intelligence
technologies (the main components of the Alterian acquisition which
completed on 27 January 2012). Prior period comparatives include
only 11 months of Alterian trading.
Segment revenue grew by 0.4% in the year, comprising an
underlying decline 4.2% offset by an acquisition effect of 3.6%,
and a foreign exchange effect of 1.0%.
The segment PBTA margin was -7% (2012: +13%), due to GBP12.1
million of planned sales, marketing and research and development
investments made during the first half of the year which did not
deliver the planned revenue increase in the second half of the
year.
New clients in 2013 include Amerigroup Corporation, Amalgamated
Banks of South Africa, Brown Forman, Frito Lay, NH Hotel, Prostate
Cancer UK, Skype, Tekla Corporation and Turkish Airlines.
Language Technologies (contributing GBP36.2 million or 14% of
total revenue and losses of GBP3.9 million of PBTA) (2012:
contributing GBP39.1 million or 15% of revenue to the group and
GBP4.0 million of PBTA).
This segment comprises Desktop translation technologies,
Enterprise translation solutions and Machine Translation.
Segment revenue reduced by 7.4% in the year, comprising an
underlying decline of 8.7% and foreign exchange effects
contributing a 1.3% increase. Whilst sales of translation
productivity tools remained relatively stable, licence revenues
were affected by weak licence bookings in enterprise translation
management tools. Although gross margins were broadly maintained at
82% (2012: 84%), a combination of declining segment revenues and
maintaining investments resulted in a PBTA margin for the year of
-11% (2012: +10%).
New clients in 2013 include Adidas, Capitol IQ, VMware and
Wurth.
Technologies (combined revenue of GBP115.6 million or 43% of
total revenue and losses of GBP9.4 million PBTA) (2012: GBP118.2
million or 44% of revenue and GBP14.5 million PBTA)
Software as a Service ("SaaS") sales continued to increase as a
proportion of total licence sales (2013: 49%; 2012 41%), a positive
trend that improves the revenue visibility of the business going
forward.
Gross Margin
The group's gross margin was 55%, a decrease from 56% in
2012.
Administrative Expenses
Administrative costs excluding intangibles amortisation and
one-off costs increased in 2013 to GBP137.4 million (2012: GBP114.3
million).
Research and development costs of GBP24.8 million (2012: GBP22.9
million) are included in administrative expenses. This includes
GBP0.5 million of incremental cost for an additional month of
research and development for Alterian that was acquired on 27
January 2012. Significant product releases in 2013 were SDL Trados
Studio 2014, SDL Intelligent Marketing Suite, SDL Customer
Commitment Framework, SDL Fredhopper 7.5, SDL Tridion 2013 and
www.freetranslation.com.
Development costs have been reviewed and the Board remains of
the opinion that capitalisation criteria under International
Accounting Standard (IAS) 38 are not met. Consequently no
development costs are capitalised on the balance sheet.
Headcount was 3,205 at the end of 2013, compared to 2,985 at the
end of 2012. Employee related costs remain the most significant
component of group costs, amounting to 67% of group overheads
(2012: 69%) excluding amortisation of intangibles and one-off
costs.
Intangible assets ascribed to certain of the Group's software
and customer relationships arising from acquisitions are amortised
over periods of between 5 and 10 years and the carrying value is
formally reviewed on an annual basis to assess whether there are
indicators of impairment. The intangible asset amortisation charge
in 2013 was GBP7.5 million (2012: GBP8.1 million).
Intangible assets and goodwill were allocated to three Cash
Generating Units ("CGU") namely Language Services, Content and
Analytic Technologies and Language Technologies. The 2013
impairment review resulted in an impairment of GBP20.4 million in
the Content and Analytic Technologies segment.
Earnings Per Share
Basic earnings per share when adjusted for amortisation of
intangibles and one-off costs ("adjusted EPS") decreased by 93% to
2.57 pence. The deferred tax benefit associated with the
amortisation of the intangible fixed assets and one-off costs of
GBP2.6 million (2012: GBP2.2 million) and one-off costs of GBP25.1
million, has been adjusted in this calculation of EPS. Basic losses
per share were 34.78 pence (2012: earnings, 26.12 pence).
Financing Costs
Interest costs in 2013 were GBP0.5 million (2012: GBP0.4m). At
the start of the year, drawn borrowings were GBP22.2 million.
GBP2.2 million was repaid in January 2013. Drawn borrowings
remained at GBP20.0 million throughout the year. Net debt was
GBP1.8m at year end.
Cash flow
The GBP28.8 million decline in PBTA, before one-off costs, was
partially offset by an improved working capital performance with an
inflow of GBP5.7 million (2012: GBP8.1 million outflow), resulting
in a reduction in cash flow from operations of only GBP12.0
million; net cash flow from operating activities was GBP5.5 million
(2012: GBP17.5 million)
Borrowing Facilities
During the year, the group's existing borrowing facilities of
GBP27 million were replaced with a single revolving credit facility
of GBP30 million expiring in September 2015; GBP20 million of this
facility was utilised at the year-end.
Pricing of this new GBP30 million borrowing facility is at a
1.15% margin on LIBOR. Under the credit facility agreement, SDL is
subject to certain financial covenants which are required to be
tested quarterly. These covenants relate to EBITA: Borrowing Costs;
Net Cash Flow: Debt Service Liability and Gross Borrowings: EBITDA.
The Board remains of the opinion that operating with low levels of
debt is appropriate in the current economic environment, whilst
maintaining sufficient debt facility headroom to finance normal
investment activities.
Derivatives and other Financial Instruments
The Group has cash and short-term deposits of varying durations
to fund its working capital needs and other financial assets and
liabilities such as trade debtors and trade creditors arising
directly from its operations. The Group's policy continued to be
that no active trading in financial instruments will be undertaken
within the operating units and all decisions on use of financial
instruments will be taken at Group level under the direction of the
Chief Financial Officer.
Taxation
SDL is a global business and as such the Group's effective tax
rate is heavily influenced by the territorial mix of where
operating profits are earned. A detailed analysis of the taxation
charge is included in note 4 to the accounts.
The tax charge for the year is GBP3.5 million (2012: GBP6.5
million).
Acquisition of Bemoko Consulting Limited
On 8 February 2013, the Group acquired 100% of the share capital
of Bemoko Consulting Limited, an unlisted company based in the
United Kingdom. The principal activity of Bemoko Consulting Limited
is the provision of mobile solutions.
The total cost of the combination comprises GBP2.2 million of
which GBP1.4 million was funded from the Group's existing cash
resources and GBP0.8 million of contingent consideration will be
settled in shares.
Trados Litigation update
As reported previously, the group has ongoing litigation related
to the Trados acquisition. In 2013, the Court of Chancery in the
State of Delaware has ruled in favour of the former Trados
Directors that there was no breach of fiduciary duty in the sale of
Trados to the Company. The judgement allows for the plaintiff to
seek recovery of some of their legal costs from the defendants on
the grounds that certain aspects of the defence was given in bad
faith, this is a cost would be a liability to the Trados Directors
personally under Delaware law. There is also the possibility the
Plaintiff appeals the decision. If the appeal by the Plaintiffs is
successful there is a potential, significant reimbursement of funds
from the Trados directors to SDL. If the Trados Directors are
successful in upholding the ruling, there could be additional legal
costs to pay by SDL of up to GBP0.2 million.
SDL plc
Consolidated INCOME STATEMENT
for the year ended 31 December 2013
Notes 2013 2012
GBPm GBPm
Sale of goods 49.6 50.8
Rendering of services 216.5 218.5
REVENUE 2 266.1 269.3
Cost of sales (120.1) (117.7)
GROSS PROFIT 146.0 151.6
Administrative expenses 3 (170.0) (123.9)
------------- --------
OPERATING (LOSS)/PROFIT (24.0) 27.7
Operating profit before TAX, AMORTISATION
AND ONE-OFF COSTS 8.6 37.3
Amortisation of intangible assets (7.5) (8.1)
One-off costs 3 (25.1) (1.5)
OPERATING (LOSS)/PROFIT (24.0) 27.7
--------------------------------------------- ------ -------------
Finance revenue 0.1 0.1
Finance costs (0.5) (0.4)
(loss)/PROFIT BEFORE TAX (24.4) 27.4
profit before TAX, AMORTISATION AND one-off
COSTS 8.2 37.0
Amortisation of intangible assets (7.5) (8.1)
One-off costs 3 (25.1) (1.5)
(LOSS)/PROFIT BEFORE TAX (24.4) 27.4
--------------------------------------------- ------ -------------
Tax expense 4 (3.5) (6.5)
(LOSS)/PROFIT FOR THE YEAR ATTRIBUTABLE
TO EQUITY HOLDERS OF THE PARENT (27.9) 20.9
============= ========
Earnings per ordinary share - basic (pence) 5 * 34.78 26.12
Earnings per ordinary share - diluted
(pence) 5 * 34.78 25.98
============= ========
SDL plc
Consolidated STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2013
Notes 2013 2012
GBPm GBPm
(Loss)/ Profit for the period (27.9) 20.9
------- ------
Currency translation differences on foreign
operations (0.1) (6.6)
Currency translation differences on foreign
currency equity loans to foreign subsidiaries (0.3) (0.3)
Income tax benefit on currency translation
differences on foreign currency equity
loans to foreign subsidiaries 4 (0.1) 0.1
OTHER COMPREHENSIVE INCOME (0.5) (6.8)
------- ------
TOTAL COMPREHENSIVE INCOME (28.4) 14.1
======= ======
SDL plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2013
Notes 2013 2012
GBPm GBPm
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 9.6 8.8
Intangible assets 6 209.0 234.5
Deferred tax asset 3.7 4.4
Rent deposits 1.6 1.6
-------- --------
223.9 249.3
CURRENT ASSETS
Trade and other receivables 70.9 66.0
Cash and cash equivalents 8 18.2 28.5
-------- --------
89.1 94.5
TOTAL ASSETS 313.0 343.8
-------- --------
CURRENT LIABILITIES
Trade and other payables (79.9) (72.7)
Loans and overdraft (20.0) (22.2)
Current tax liabilities (4.8) (8.3)
Provisions (2.3) (1.6)
-------- --------
(107.0) (104.8)
NON CURRENT LIABILITIES
Other payables (2.6) (2.1)
Deferred tax liability (6.0) (8.3)
Provisions (0.9) (0.8)
-------- --------
(9.5) (11.2)
TOTAL LIABILITIES (116.5) (116.0)
-------- --------
NET ASSETS 196.5 227.8
======== ========
EQUITY
Share capital 0.8 0.8
Share premium account 97.4 96.8
Retained earnings 83.5 114.9
Foreign exchange differences 14.8 15.3
-------- --------
TOTAL EQUITY 196.5 227.8
======== ========
SDL plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2013
Share Retained Foreign
Share Premium Earnings Exchange
Capital Account Differences Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2012 0.8 95.9 99.0 22.1 217.8
Profit for the period - - 20.9 - 20.9
Other comprehensive income - - - (6.8) (6.8)
----------- ----------- ------------ --------------- ---------
Total comprehensive income - - 20.9 (6.8) 14.1
Deferred income taxation
on share based payments
(Note 4) - - 0.2 - 0.2
Tax credit for share
options (Note 4) - - 0.5 - 0.5
Arising on share issues - 0.9 - - 0.9
Dividend paid - - (4.6) - (4.6)
Share based payments - - (1.1) - (1.1)
----------- ----------- ------------ --------------- ---------
At 31 December 2012 0.8 96.8 114.9 15.3 227.8
----------- ----------- ------------ --------------- ---------
Share Retained Foreign
Share Premium Earnings Exchange
Capital Account Differences Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2013 0.8 96.8 114.9 15.3 227.8
Loss for the period - - (27.9) - (27.9)
Other comprehensive income - - - (0.5) (0.5)
----------- ----------- ------------ --------------- ---------
Total comprehensive income - - (27.9) (0.5) (28.4)
Deferred income taxation
on share based payments
(Note 4) - - 0.2 - 0.2
Tax credit for share
options (Note 4) - - - - -
Arising on share issues - 0.6 - - 0.6
Dividend paid - - (4.9) - (4.9)
Share based payments - - 1.2 - 1.2
----------- ----------- ------------ --------------- ---------
At 31 December 2013 0.8 97.4 83.5 14.8 196.5
----------- ----------- ------------ --------------- ---------
SDL plc
consolidated STATEMENT OF CASH FLOWS
for the year ended 31 December 2013
Notes 2013 2012
GBPm GBPm
(LOSS)/PROFIT BEFORE TAX (24.4) 27.4
Depreciation of property, plant and equipment 5.1 4.1
Amortisation of intangible assets 6 7.5 8.1
Impairment losses on intangible assets 20.4 -
Finance revenue (0.1) (0.1)
Finance costs 0.5 0.4
Share based payments 1.2 (1.1)
Gain on disposal of investment - (0.7)
Increase in trade and other receivables (2.4) (3.1)
Increase/(decrease) in trade and other
payables 8.1 (5.0)
Exchange differences 0.2 (1.7)
CASH GENERATED FROM OPERATIONS BEFORE
ONE-OFF ALTERIAN RELATED ACQUISITION COSTS 16.1 28.3
Alterian related acquisition costs (0.3) (2.5)
CASH GENERATED FROM OPERATIONS 15.8 25.8
Income tax paid (10.3) (8.3)
------- -------
NET CASH FLOWS FROM OPERATING ACTIVITIES 5.5 17.5
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire property, plant &
equipment (6.1) (5.4)
Receipts from sale of property, plant
& equipment 0.1 -
Payments to acquire subsidiaries (1.4) (69.7)
Net cash acquired with subsidiaries 0.2 0.6
Receipts from sale of investment - 0.7
Interest received 0.1 0.2
------- -------
NET CASH FLOWS FROM INVESTING ACTIVITIES (7.1) (73.6)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issue of ordinary share
capital 0.2 0.4
Proceeds from borrowings 20.0 22.2
Repayment of borrowings (22.2) (1.9)
Dividend paid (4.9) (4.6)
Repayment of capital leases (0.4) (0.8)
Interest paid (0.5) (0.4)
NET CASH FLOWS FROM FINANCING ACTIVITIES (7.8) 14.9
DECREASE IN CASH AND CASH EQUIVALENTS (9.4) (41.2)
======= =======
MOVEMENT IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the start
of year 28.5 70.4
Decrease in cash and cash equivalents (9.4) (41.2)
Effect of exchange rates on cash and cash
equivalents (0.9) (0.7)
NET CASH AND CASH EQUIVALENTS AT END OF
YEAR 8 18.2 28.5
======= =======
SDL plc
notes to the financial INFORMATION
1. BASIS OF ACCOUNTING
Basis of preparation
The financial information set out above does not constitute the
Group's statutory financial statements for the years ended 31
December 2013 or 2012. Statutory consolidated financial statements
for the Group for the year ended 31 December 2012, prepared in
accordance with adopted IFRS, have been delivered to the Registrar
of Companies. The auditors have reported on the 2012 accounts;
their report was (i) unqualified, (ii) did not include a reference
to any matters to which the auditors drew attention by way of any
emphasis without qualifying their opinion and (iii) did not contain
a statement under Section 498 (2) or (3) of the Companies Act
2006.
The financial information for the year ended 31 December 2013
has been prepared by the directors based upon the results and
position that are reflected in the consolidated financial
statements of the Group.
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 information are consistent with
those followed in preparation of the Group's annual financial
statements for the year ended 31 December 2012.
In line with UK Corporate Governance Code requirements, the
Directors have made enquiries concerning the potential of the
business to continue as a going concern.
The company has a GBP30m RCF facility with RBS which currently
matures in September 2015 and the company has been in discussions
with RBS in order to amend and extend this facility. RBS have
issued a credit approved term sheet which extends the facility to
June 2017 (if required by the group and subject to the group
meeting certain tests in 2014). As with the current facility, the
availability of the amended facility is also subject to number of
conditions, such as quarterly covenant tests. The company expects
to finalise agreement with the bank very shortly.
The Directors' enquiries included a review of performance in
2013, 2014 annual plans, a review of working capital including the
liquidity position, financial covenant compliance and a review of
current cash levels. As a result, they have a reasonable
expectation that the group has adequate resources to continue in
operational existence for the foreseeable future. Given this
expectation they have continued to adopt the going concern basis in
preparing the accounts.
2. SEGMENT INFORMATION
The Group operates in the Customer Experience Management
industry. For management purposes, the Group is organised into
business units based on their products and services, and following
a reorganisation in the year, has three reportable operating
segments as follows:
-- The Language Services (formerly referred to as Global
Solutions) segment is the provision of a translation service for
customer's multilingual content in multiple languages.
-- The Content and Analytic Technologies segment (formerly the
Content Management Technologies and Campaign Management, Analytic
and Social Intelligence segments) is the sale of content
management, campaign management, social media monitoring and
marketing analytic technologies together with associated
consultancy and services.
-- The Language Technologies segment is the sale of enterprise,
desktop and statistical machine translation technologies together
with associated consultancy and other services
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.
In accordance with IFRS8, the operating segments for the
comparative period have been restated to the operating segments
that exist in 2013.
Year ended 31 December 2013
Segment profit
External before taxation
Revenue Total Revenue Depreciation and amortisation
GBPm GBPm GBPm GBPm
Language Services 150.5 150.5 1.7 17.6
----------------------------------- --------- -------------- ------------- ------------------
Content and Analytic Technologies 79.4 79.4 1.4 (5.5)
Language Technologies 36.2 36.2 2.0 (3.9)
----------------------------------- --------- -------------- ------------- ------------------
Total Technologies 115.6 115.6 3.4 (9.4)
----------------------------------- --------- -------------- ------------- ------------------
Historic litigation costs - - - (1.4)
Restructuring costs - - - (3.3)
Impairment charge (Note
3) (20.4)
Total 266.1 266.1 5.1 (16.9)
--------- -------------- -------------
Amortisation (7.5)
------------------
Loss before taxation (24.4)
==================
Year ended 31 December 2012 -restated
Segment profit
External before taxation
Revenue Total Revenue Depreciation and amortisation
GBPm GBPm GBPm GBPm
Language Services 151.1 151.1 1.1 23.2
----------------------------------- --------- -------------- ------------- ------------------
Content and Analytic Technologies 79.1 79.1 1.5 10.5
Language Technologies 39.1 39.1 1.5 4.0
----------------------------------- --------- -------------- ------------- ------------------
Total Technologies 118.2 118.2 3.0 14.5
----------------------------------- --------- -------------- ------------- ------------------
Historic litigation costs - - - (1.5)
Acquisition related costs - - - (0.7)
--------- -------------- ------------- ------------------
Total 269.3 269.3 4.1 35.5
--------- -------------- -------------
Amortisation (8.1)
------------------
Profit before taxation 27.4
==================
Segment assets:
2013 2012
GBPm GBPm
Language Services 58.9 55.7
Content and Analytic Technologies 141.6 170.8
Language Technologies 87.1 83.2
Adjustments and eliminations (1) 25.4 (2) 34.1
--------- ---------
Total 313.0 343.8
========= =========
(1) Segment assets do not include cash (GBP18.2m), Corporation
Tax (GBP3.5m) and Deferred Tax (GBP3.7m).
(2) Segment assets do not include cash (GBP28.5m), Corporation
Tax (GBP1.2m) and Deferred Tax (GBP4.4m).
Geographical analysis of external revenues by country of
domicile is as follows:
2013 2012
GBPm GBPm
UK 63.9 66.7
USA 77.2 82.5
Republic of Ireland 24.7 24.2
Netherlands 21.0 17.9
Belgium 16.1 15.2
Germany 15.4 15.3
Canada 11.8 11.2
Rest of World 36.0 36.3
------ ------
266.1 269.3
====== ======
Geographical analysis of non-current assets excluding deferred
tax is as follows:
2013 2012
GBPm GBPm
UK 173.8 199.2
USA 40.9 40.4
Rest of World 5.5 5.3
------ ------
220.2 244.9
====== ======
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.
3. OTHER REVENUE AND EXPENSES
Group operating profit is stated after charging/(crediting):
2013 2012
GBPm GBPm
Included in administrative expenses:
Research and development expenditure 24.8 22.9
Bad debt charge 0.8 0.6
Depreciation of property, plant and
equipment - owned assets 4.9 2.9
Depreciation of property, plant and
equipment - leased assets 0.2 1.1
Amortisation of intangible assets 7.5 8.1
Operating lease rentals for plant and
machinery 0.6 0.6
Operating lease rentals for land and
buildings 6.9 6.6
Net foreign exchange losses/ (gains) - (1.0)
Share based payment charge/ (credit) 1.2 (1.1)
The net foreign exchange gains 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 intra-Group
loans.
One-off costs
2013 2012
GBPm GBPm
Historic litigation costs 1.4 1.5
Onerous lease 0.4 -
Redundancy costs 2.5 -
Impairment charge 20.4 -
Other 0.4 -
----- -----
25.1 1.5
===== =====
One-off costs relate to costs associated with the ongoing
historic litigation claim against the Group, the costs associated
with the re-organisation of the Group in late 2013 and a goodwill
impairment write down relating to the Group's Content and Analytic
Technologies CGU.
These have been separately disclosed in the income statement to
provide a better guide to underlying business performance.
4. INCOME TAX
(a) Income tax on profit:
Consolidated income statement
2013 2012
GBPm GBPm
Current taxation
UK Income tax charge
Current tax on income for the period 0.7 1.3
Adjustments in respect of prior periods 0.2 (0.5)
0.9 0.8
------ ------
Foreign tax
Current tax on income for the period 4.1 6.3
Adjustments in respect of prior periods 0.3 0.1
------ ------
4.4 6.4
------ ------
Total current taxation 5.3 7.2
====== ======
Deferred income taxation
Origination and reversal of temporary
differences (1.8) (0.7)
Total deferred income tax (1.8) (0.7)
====== ======
Tax expense (see (b) below) 3.5 6.5
====== ======
Consolidated statement of other comprehensive income
2013 2012
GBPm GBPm
Current taxation
UK Income tax
Income tax benefit on currency translation
differences on foreign currency equity
loans to foreign subsidiaries 0.1 (0.1)
------ ------
Total current taxation 0.1 (0.1)
====== ======
A tax credit in respect of share based compensation for current
taxation of nil (2012: credit of GBP0.5 million) has been
recognised in the statement of changes in equity in the year.
A tax credit in respect of share based compensation for deferred
taxation of GBP0.2 million (2012: credit of GBP0.2 million) 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 higher than the standard rate of income tax in the UK of
23.25% (2012: 24.5%). The differences are reconciled below:
2013 2012
GBPm GBPm
Profit on ordinary activities before tax (24.4) 27.4
------- ------
Profit on ordinary activities at standard
rate of tax in the UK 23.25% (2012: 24.5%) (5.7) 6.7
Expenses not deductible for tax purposes 0.9 0.2
Impairment of goodwill 4.7
Non taxable income - (0.3)
Adjustments in respect of previous years 0.5 (0.4)
Capital allowances for the period in excess
of depreciation (0.5) (0.7)
Utilisation of tax losses brought forward
previously not recognised (1.0) (0.9)
Current tax losses not available for offset 5.2 1.3
Effect of overseas tax rates 0.2 -
Other (0.8) 0.6
Tax expense (see (a) above) 3.5 6.5
======= ======
5. EARNINGS PER SHARE
The calculation of basic earnings per ordinary share is based on
a loss after tax of GBP27.9 million (2012: profit GBP20.9 million)
and 80,283,053 (2012: 79,851,785) 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 7. For 2013, the diluted ordinary
shares were based on 81,222,432 ordinary shares that included
939,379 potential ordinary shares.
The following reflects the income and share data used in the
calculation of adjusted earnings per share computations before
one-off costs:
2013 2012
GBPm GBPm
(Loss)/ profit for the year (27.9) 20.9
One-off costs 25.1 1.5
Amortisation of intangible fixed assets 7.5 8.1
Less: tax benefit associated with the amortisation
of intangible fixed assets and one-off
costs (2.6) (2.2)
------- ------
Adjusted profit for the year 2.1 28.3
======= ======
2013 2012
No. No.
Weighted average number of ordinary shares
for basic earnings per share 80,283,053 79,851,785
Effect of dilution resulting from share
options 939,379 424,086
----------- -----------
Weighted average number of ordinary shares
adjusted for the effect of dilution 81,222,432 80,275,871
=========== ===========
2013 2012
Adjusted earnings per ordinary share -
basic (pence) 2.57 35.41
Adjusted earnings per ordinary share -
diluted (pence) 2.54 35.22
There have been no material transactions involving ordinary
shares or potential ordinary shares between the reporting date and
the date of this financial information.
6. INTANGIBLE ASSETS
Customer Intellectual
Relationships Property Goodwill Total
GBPm GBPm GBPm GBPm
Cost:
At 1 January 2012 11.1 50.9 143.5 205.5
Acquisition of subsidiaries 8.9 10.8 72.3 92.0
Currency adjustment (0.4) (1.5) (3.8) (5.7)
--------------- ------------- --------- ---------
At 1 January 2013 19.6 60.2 212.0 291.8
Acquisition of subsidiaries 0.5 0.3 1.3 2.1
Currency adjustment - 0.1 0.2 0.3
--------------- ------------- --------- ---------
At 31 December 2013 20.1 60.6 213.5 294.2
=============== ============= ========= =========
Amortisation:
At 1 January 2012 (7.4) (30.7) (12.2) (50.3)
Provided during the year (2.7) (5.4) - (8.1)
Currency adjustment 0.2 0.9 - 1.1
---------------
At 1 January 2013 (9.9) (35.2) (12.2) (57.3)
Provided during the year (2.4) (5.1) - (7.5)
Impairment loss - - (20.4) (20.4)
Currency adjustment - - - -
--------------- ------------- --------- ---------
At 31 December 2013 (12.3) (40.3) (32.6) (85.2)
=============== ============= ========= =========
Net book value:
At 31 December 2013 7.8 20.3 180.9 209.0
===============
At 1 January 2013 9.7 25.0 199.8 234.5
=============== ============= ========= =========
Customer relationships and intellectual property are amortised
on a straight-line basis over their estimated useful lives of
between 5 and 10 years. As from 1 January 2004, the date of
transition to IFRS, goodwill is no longer amortised but is now
subject to annual impairment testing.
7. 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:
2013 2013 2012 2012
No. WAEP No. WAEP
Outstanding at the beginning
of the year 1,025,737 GBP3.84 1,156,157 GBP3.15
Granted during the year 353,331 GBP4.20 166,545 GBP7.48
Forfeited during the year (180,050) GBP4.89 (103,459) GBP5.45
Exercised during the year (24,000) GBP1.88 (193,506) GBP1.99
Expired during the year - - - -
---------- ----------
Outstanding at the end of
the year 1,175,018 GBP3.83 1,025,737 GBP3.84
========== ==========
Exercisable at 31 December 554,993 GBP1.95 578,993 GBP1.95
The weighted average share price at the date of exercise for the
options exercised is GBP3.90 (2012: GBP6.63).
For the share options outstanding as at 31 December 2013, the
weighted average remaining contractual life is 5.76 years (2012:
5.64 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 and
key output to the model:
2013 2012
Weighted average share price (pence) 420 748
Weighted average fair value at
grant date (pence) 67 144
Expected volatility 30% 30%
Expected option life 3 years 4 years
Expected dividends 2% 1%
Risk-free interest rate 0.3% 0.5%
The range of exercise prices for options outstanding at the end
of the year was GBP1.17 - GBP7.48 (2012: GBP1.17 - GBP7.48).
2013 2012
Date of Grant Exercise Period Number Number
GBP1.01 10 years after grant
- GBP1.50 02/04/04-04/04/05 date 291,618 305,118
------------------- ---------------------- ---------- ----------
GBP2.01 10 years after grant
- GBP2.50 22/03/06-03/10/06 date 23,700 23,700
------------------- ---------------------- ---------- ----------
GBP2.51 10 years after grant
- GBP3.00 28/02/08-02/03/09 date 234,475 244,975
------------------- ---------------------- ---------- ----------
GBP3.51 10 years after grant
- GBP4.00 23/05/07 date 5,200 5,200
------------------- ---------------------- ---------- ----------
GBP4.01 10 years after grant
- GBP4.50 17/04/13 date 336,899 -
------------------- ---------------------- ---------- ----------
GBP4.51 10 years after grant
- GBP5.00 12/04/10 date - 119,115
------------------- ---------------------- ---------- ----------
GBP5.01 10 years after grant
- GBP5.50 10/09/10 date - 29,070
------------------- ---------------------- ---------- ----------
GBP6.51 10 years after grant
- GBP7.00 18/05/11 date 146,331 151,296
------------------- ---------------------- ---------- ----------
GBP7.01 10 years after grant
- GBP7.50 10/04/12 date 136,795 147,263
------------------- ---------------------- ---------- ----------
Total 1,175,018 1,025,737
---------- ----------
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 and key output to the model in the year of grant:
2013 2012
Expected volatility 31% 30%
Weighted average fair value at grant date (pence) 102 467
Expected life 3 years 3 years
Expected dividends 2% 1%
Risk-free interest rate 0.3% 0.5%
2013 2013 2012 2012
No. WAEP No. WAEP
Outstanding at the beginning
of the year 1,710,108 GBP0.01 2,304,736 GBP0.01
Granted during the year 1,193,530 GBP0.01 667,356 GBP0.01
Exercised during the year - - (711,918) GBP0.01
Forfeited during the year (989,800) GBP0.01 (550,066) GBP0.01
----------
Outstanding at the end of the
year 1,913,838 GBP0.01 1,710,108 GBP0.01
========== ==========
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).
Retention Scheme Award
The fair value of equity-settled shares granted under the SDL
Retention Share Plan is estimated as at the date of grant using a
Black Scholes model, taking into account the terms and conditions
upon which the options were granted. The following table lists the
inputs and key output to the model used in the year of grant:
2013
Expected volatility 30.2%
Weighted average fair value at
grant date (pence) 392
Expected life 1.5 years
Expected dividends 1.5%
Risk-free interest rate 0.18%
2013
No.
Outstanding at the beginning of
the year -
Granted during the year 1,137,026
Forfeited during the year (458,830)
Outstanding at the end of the year 678,196
==========
Exercisable at 31 December Nil
All RSPs 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 movements in, the SDL
Save As You Earn Scheme during the year:
2013 2012
No. No.
Outstanding at the beginning
of the year 296,407 149,567
Granted during the year 323,215 214,131
Exercised during the year (8,563) (31,861)
Forfeited during the year (219,612) (35,430)
---------
Outstanding at the end of the
year 391,447 296,407
========== =========
Exercisable at 31 December Nil Nil
For the SAYE shares outstanding as at 31 December 2013, the
weighted average remaining contractual life is 1.82 years (2012:
1.86 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 and key
output to the model in the year of grant:
2013 2012
Weighted average share price
(pence) 324 599
Expected volatility 36% 29%
Expected option life 1.4 years 3.5 years
Expected dividends 1.5% 1%
Risk-free interest rate 0.5% 0.2%
8. ADDITIONAL CASH FLOW INFORMATION
Analysis of group net debt:
Cash
1 acquired 31
January Cash on Exchange December
2013 flow acquisition differences 2013
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 28.5 (9.6) 0.2 (0.9) 18.2
Loans (22.2) 2.2 - - (20.0)
--------- ------ ------------- ------------- ----------
6.3 (7.4) 0.2 (0.9) (1.8)
========= ====== ============= ============= ==========
Debt
1 acquired 31
January Cash on Exchange December
2012 flow acquisition differences 2012
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 70.4 (41.8) 0.6 (0.7) 28.5
Loans - (20.3) (1.9) - (22.2)
70.4 (62.1) (1.3) (0.7) 6.3
========= ======= ============= ============= ==========
9. BUSINESS COMBINATIONS
Acquisition of Bemoko Consulting Limited
On 8 February 2013, the Group acquired 100% of the share capital
of Bemoko Consulting Limited, an unlisted company based in the
United Kingdom. The principal activity of Bemoko Consulting Limited
is the provision of mobile solutions.
The total cost of the combination comprises GBP2.2 million of
which GBP1.4 million was funded from the Group's existing cash
resources and GBP0.8 million of contingent consideration will be
settled in shares.
The values of the identifiable assets and liabilities of Bemoko
Consulting Limited as at the date of acquisition were:
Fair value
to
Book value Group
GBPm GBPm
Intangible assets - 0.8
Trade receivables 0.1 0.1
Cash and cash equivalents 0.2 0.2
Deferred tax liabilities - (0.2)
----------- -----------
Net assets 0.3 0.9
===========
Goodwill arising on acquisition 1.3
-----------
2.2
===========
Discharged by: GBPm
Cash paid to shareholders 1.4
Fair value of contingent consideration 0.8
-----------
Total consideration 2.2
===========
Cash outflow on the acquisition:
Net cash and cash equivalents acquired with
the subsidiary 0.2
Total cash paid (1.4)
-----------
Net cash outflow (1.2)
===========
The maximum contingent consideration is GBP0.8 million. The fair
value was calculated at GBP0.8 million and under IFRS 3 (revised)
any re-measurement will be recognised in the income statement.
From the date of acquisition, Bemoko Consulting Limited has
contributed GBP0.4 million of revenue and a loss of GBP0.2 million
to the net loss after tax of the Group. If the combination had
taken place at the beginning of the year, the loss for the Group
would have been GBP27.9 million and revenue from continuing
operations would have been GBP266.1 million. Included in the GBP1.3
million of goodwill recognised above are certain intangible assets
that cannot be individually separated from the acquired business
due to their nature. These items include the assembled
workforce.
10. EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE
There are no known events occurring after the statement of
financial position date that require disclosure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JRMMTMBABTTI
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