TIDMSDL
RNS Number : 2294O
SDL PLC
05 August 2014
5 August 2014
SDL PLC
Interim results for the six months ended 30 June 2014
A period of significant transformation, enhancing our
capabilities to deliver solutions for Customer Experience
Management
SDL plc ("SDL", "the Group" or the "Company"), a leader in
Customer Experience Management solutions, announces its unaudited
interim results for the six months ended 30 June 2014.
Unaudited Unaudited
6 months 6 months
to to
30 June 30 June
2014 2013
GBPm GBPm
Income Statement:
Revenue 129.1 131.0
Profit before tax, amortisation of
intangible assets and one-off costs 6.7 2.8
Profit/(loss) before tax 3.1 (2.3)
Earnings per ordinary share - basic
(pence) 2.30 (1.74)
Adjusted earnings per ordinary share
- basic (pence) 5.71 3.56
Statement of Financial Position:
Total equity 195.4 231.5
Cash and cash equivalents 16.9 20.6
Interest bearing loans and borrowings (15.0) (20.0)
First half highlights
-- Group revenues GBP129.1m, up 4% at constant currency despite a marginal fall in reported
revenues
-- Group Profit before One-Off costs, Amortisation and Tax
("PBTA") GBP6.7m vs last year of GBP2.8m,
up 168% at constant currency
-- Language Services constant currency revenue growth of 4%, gross margin 44%, net
contribution 15%
-- Technology bookings up 16% at constant currency (H1 2013 to H1 2014)
-- Technology Annual Recurring Revenue ("ARR") up 4.5% at constant currency in first half
Mark Lancaster, Chief Executive Officer, commented:
The significant sales, marketing and operational restructuring
that SDL executed in late 2013 has provided the business with the
delivery capability it requires for sustainable growth. Our first
half performance is encouraging and confirms the Board's optimism
about the future.
The Board's expectations for 2014 remain unchanged and the Board
remains confident in the Group's strategy and ability to deliver
long term shareholder value.
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
The first half of 2014 has seen a necessary period of
consolidation and bedding in of our new organisation. As I wrote in
my statement accompanying our preliminary results in March, 2013
was a period of great change for the Group executed with speed and
commitment. Given the amount of change that took place last year,
it is encouraging to report on a first half of steady progress
towards our goals. It is pleasing to see the resumption of
significant organic technology bookings growth and that our
Language Services business has returned to the historic levels of
profitability.
This is testimony to our strong brand, outstanding customer base
and key technologies. The synergies we are extracting have helped
us increase our gross margin and stabilise our operating profit.
The full impact of these changes will take some time to be visible
within our Income Statement.
As I reported at the last year end, whilst Mark Lancaster has
been strengthening the Executive Management team, we have also been
working together to strengthen the Board. Our new Senior
Independent Non-Executive Director, Alan McWalter and our new
Remuneration Committee Chair, Glenn Collinson, have now had a few
months to settle into their new roles. I believe they will make
valuable contributions to the future success of our company.
Although we have made good progress during the first half of the
year, and the leading indicators are beginning to evidence that
progress, it is still a little early to be able to predict
precisely when the business will again be achieving its full
potential. Our first half performance is encouraging and confirms
the Board's optimism about the future.
David Clayton
Chairman
CEO Review
First half highlights
-- Group revenues GBP129.1m, up 4% at constant currency despite a marginal fall in revenues
-- Group Profit before One-Off costs, Amortisation and Tax
("PBTA") GBP6.7m vs last year of GBP2.8m,
up 168% at constant currency
-- Language Services constant currency revenue growth of 4%, gross margin 44%, net
contribution 15%,
-- Technology bookings up 16% at constant currency (H1 2013 to H1 2014)
-- Technology Annual Recurring Revenue ("ARR") up 4.5% at constant currency in first half
-- Largest number of significant Technology licence bookings in the history of SDL, including
Akamai Technologies, House of Fraser, Lloyd's Register,
Schneider Electric, Specsavers and
TomTom
-- Launch of 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.
-- Launch of the SDL Language Cloud(TM), a cloud translation platform that empowers
organizations to easily communicate across languages and engage
global customers.
-- Further strengthening of the executive team with the appointment of Bernadette Nixon, an
experienced software sales leader, as Chief Revenue Officer.
Customer Experience Management
SDL started life as a Language Services business. We then
invested into language technology, believing that language would
become one of the key requirements for anyone engaged in global
trade. SDL subsequently built one of the largest and most
profitable language solution companies in the world. As the market
increasingly accepts the importance of language in customer
engagement, our continued investment into the future of language
technology and language services infrastructure creates significant
differentiation in our Customer Experience Cloud offering.
Ten years ago we believed that digital content management
technology would be crucial to enable businesses to engage with
their customers as those interactions became more digital. Over the
last ten years SDL has invested in this vision. SDL has acquired,
and then further developed, technology to create a single
integrated technology suite.
In January 2014, 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 entire organisations from the
marketing department through to customer support in order to
understand, create, manage and deliver contextually relevant
customer experiences that drive better marketing decisions,
e-commerce success and long-term customer engagement.
In June 2014 we launched the SDL Language Cloud(TM), the first
cloud-based language platform to offer the full spectrum of
translation options - human, machine and specialist machine
translation - providing a solution for translating all content,
from highly branded campaigns to websites, support content, user
reviews and instant chat. With this platform, marketers benefit
from the ability to engage customers around the globe, across every
touch point, in the right language, providing a culturally relevant
and seamless experience for the buyer. Brands can now create
content and experiences and weave them together into the local
language at the point of creation, delivering communication where
the customer wants to see it, in the language that they want to see
it in.
First Half Performance
It is in this historic context that we present our interim
results. The restructuring the business undertook in 2013 was
essential to enable SDL to fully maximise the opportunity in the
marketplace. Our One SDL initiative is essential for us to fully
leverage the technologies we have, the customers we serve across
the business and the talented people who bring these solutions to
reality.
A key backbone of our group is our Language Services business,
which I am pleased to say, has returned to constant currency growth
during the first half whilst also improving levels of
profitability. In our Technology business the improved performance
will take longer to impact the income statement. The solid growth
in bookings is a positive lead indicator. Given the size and
complexity of some of the solutions we are now delivering to our
customers and the increase in our subscription based business, the
rate at which bookings will translate into recognised revenue will
be somewhat slower than has been the case in the past. The
improvement in our annual recurring revenue from services such as
support and maintenance is also providing a good underpinning to
our revenue outlook. Although we are encouraged to see some
momentum returning to the sales side of our business, we must be
cautious about the speed of the turnaround. As a consequence, we
have managed our costs carefully in order to protect the Group's
profitability and cash flows.
Outlook
Our Technology bookings and annual recurring revenues are
increasing as a result of our restructuring and investments. Our
Language Services division has recovered to deliver high gross and
net margin stability and we expect to see this continue to improve
as we move towards 2015. We also expect to see Language Services
growth improving in 2015, due to sales restructuring in North
America. The full extent of the organisational restructuring is yet
to be delivered and we believe it will be well into 2015 before we
will really feel the impact of our restructuring and investments.
Many of the longer term investments in technology will deliver in
late 2015 and early 2016.
As the world fully embraces the digital age, businesses have
recognised the need to completely change the way they operate to
successfully engage with their customers. Customers now expect in
context, immediate and relevant information at all stages of the
customer journey. Language is becoming more important in Customer
Experience Management delivery as the world becomes a smaller place
through advances in technology.
With the significant sales, marketing and operations
restructuring SDL executed in late 2013 we now feel we have the
delivery capability, which we lacked in the past. Our first half
performance is encouraging and confirms the Board's optimism about
the future.
The Board's expectations for 2014 remain unchanged and the Board
remains confident in the Group's strategy and ability to deliver
long term shareholder value.
Financial Review
Summary Performance
The Group's performance in the first half was in-line with the
Board's expectations. Revenues were GBP129.1 million (2013:
GBP131.0 million). Profit before taxation, amortisation of
intangible assets and one off costs ("PBTA") was GBP6.7 million
(2013: GBP2.8 million). Gross cash in the business at the half year
was GBP16.9 million (31 December 2013: GBP18.2 million) and net
cash after borrowings was GBP1.9 million (31 December 2013: net
debt GBP1.8 million)
Headline revenue decreased by 1%. Organic growth of 4% was
offset by adverse foreign currency effects of 5%. Language Services
and Technology segments have grown by 4% and 2% respectively on a
constant currency basis.
Cash generated from operations was GBP7.1 million (2013: GBP9.6
million). Cash generation in the period has been impacted by cash
outflows associated with the prior year restructuring programme and
the cash settlement of retention share plans. Capital expenditure
was reduced at GBP1.3 million following the prior year investment
in SaaS Cloud infrastructure (2013: GBP5.0 million). Tax paid was
GBP1.5 million (2013: GBP4.8 million).
Performance by Segment
Following the 2013 restructure, the Group now has two reportable
segments:
Language Services (contributing GBP72.9 million or 56% of total
revenue and GBP11.3 million of PBTA) (2013: contributing GBP73.4
million or 56% of total revenue and GBP8.6 million of PBTA).
Segment revenue reduced by 1% in the period, comprising an
underlying increase of 4% at constant currency, and a 5% adverse
foreign exchange impact. Revenue growth has been strongest in
Europe which grew at 8% on a constant currency basis.
The strong second half margin performance seen in 2013 has
continued into 2014. Gross margins have recovered to 44% in the
first half as the benefits of operational initiatives including
expanded use of automated translation technology, new workflow
efficiency tooling and use of low cost production centres have been
realised.
Segment PBTA margin increased to 15% (2013: 12%).
New clients in the period include SuperGiant Games, 505 Games,
Steelcase, Rentokil, China Southern Airlines and TradeStation
Securities.
Technology (contributing GBP56.2 million or 44% of revenue and
losses of GBP4.6 million PBTA) (2013: contributing GBP57.6 million
or 44% of revenue and losses of GBP5.8 million PBTA).
Segment revenue reduced by 2% in the period, comprising an
underlying increase of 2% at constant currency offset by a 4%
foreign currency impact.
The Group has maintained investment in its sales, marketing and
operations teams in the period. Several key commercial measures
have improved demonstrating sales momentum and improved revenue
visibility of the business for the future:
-- Bookings in the period were GBP50.1 million, an improvement
of 16% on the prior period (GBP43.1 million) at constant
currency;
-- The new bookings pipeline for the second half is 2.6 times forecast new bookings;
-- At the end of June, Annual Recurring Revenue (ARR) from SaaS
and perpetual support and maintenance contracts was GBP64.5
million, an increase of 5% on December 2013 (GBP61.7 million), at
constant currency.
New customers who bought our technology solutions during the
period include Akamai Technologies, House of Fraser, Lloyd's
Register, Schneider Electric, SNL Financial, Specsavers and
TomTom.
SDL plc
Interim Condensed Consolidated Income Statement
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
Notes GBPm GBPm GBPm
Continuing Operations
Sale of goods 25.0 24.1 49.6
Rendering of services 104.1 106.9 216.5
---------- ---------- -------------
REVENUE 2 129.1 131.0 266.1
Cost of sales (56.1) (59.8) (120.1)
---------- ---------- -------------
GROSS PROFIT 73.0 71.2 146.0
Administration expenses (69.8) (73.3) (170.0)
---------- ---------- -------------
OPERATING PROFIT / (LOSS) 3 3.2 (2.1) (24.0)
OPERATING PROFIT BEFORE
TAX, AMORTISATION AND ONE-OFF
COSTS 6.8 3.0 8.6
Amortisation of intangible
assets (3.6) (3.8) (7.5)
One-off costs - (1.3) (25.1)
OPERATING PROFIT / (LOSS) 3 3.2 (2.1) (24.0)
--------------------------------- ------ ---------- ---------- -------------
Finance revenue - - 0.1
Finance costs (0.1) (0.2) (0.5)
---------- ---------- -------------
PROFIT / (LOSS) BEFORE
TAX 3.1 (2.3) (24.4)
PROFIT BEFORE TAX, AMORTISATION
AND ONE-OFF COSTS 6.7 2.8 8.2
Amortisation of intangible
assets (3.6) (3.8) (7.5)
One-off costs - (1.3) (25.1)
---------- ---------- -------------
PROFIT / (LOSS) BEFORE
TAX 3.1 (2.3) (24.4)
--------------------------------- ------ ---------- ---------- -------------
Tax (expense) / credit 4 (1.2) 0.9 (3.5)
PROFIT / (LOSS) FOR THE
PERIOD 1.9 (1.4) (27.9)
---------- ---------- -------------
Pence Pence Pence
Earnings per ordinary share
- basic (pence) 5 2.30 (1.74) (34.78)
Earnings per ordinary share
- diluted (pence) 5 2.28 (1.73) (34.78)
Adjusted earnings per ordinary share (basic and diluted) are
shown in note 5.
SDL plc
Interim Condensed Consolidated Statement of Comprehensive
Income
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
Profit / (loss) for the period 1.9 (1.4) (27.9)
---------- ---------- -------------
Currency translation differences
on foreign operations (4.6) 9.3 (0.1)
Currency translation differences
on foreign currency equity loans
to foreign subsidiaries 0.6 (0.6) (0.3)
Income tax (charge) / benefit
on currency translation differences
on foreign currency equity loans
to foreign subsidiaries (0.2) 0.2 (0.1)
---------- ---------- -------------
Other comprehensive income (4.2) 8.9 (0.5)
---------- ---------- -------------
Total comprehensive income (2.3) 7.5 (28.4)
---------- ---------- -------------
All the total comprehensive income is attributable to equity
holders of the parent Company. A currency translation difference on
a foreign operation may be reclassified to the Income Statement
upon disposal of that operation. There are no other items included
in Other Comprehensive Income that may be reclassified to the
Income Statement in the future.
SDL plc
Interim Condensed Consolidated Statement of Financial
Position
Unaudited Unaudited Audited
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 8.3 11.9 9.6
Intangible assets 202.1 240.7 209.0
Deferred income tax 5.2 4.6 3.7
Rent deposits 1.5 1.7 1.6
217.1 258.9 223.9
---------- ---------- -------------
CURRENT ASSETS
Trade and other receivables 62.9 60.7 67.4
Current tax asset 4.5 1.9 3.5
Cash and cash equivalents 16.9 20.6 18.2
---------- ---------- -------------
84.3 83.2 89.1
---------- ---------- -------------
TOTAL ASSETS 301.4 342.1 313.0
---------- ---------- -------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (73.7) (75.1) (79.9)
Loans and overdraft (15.0) (20.0) (20.0)
Current tax liabilities (7.6) (4.2) (4.8)
Provisions (2.0) (0.5) (2.3)
---------- ---------- -------------
(98.3) (99.8) (107.0)
---------- ---------- -------------
NON CURRENT LIABILITIES
Other payables (1.5) (2.8) (2.6)
Deferred income tax (5.2) (7.3) (6.0)
Provisions (1.0) (0.7) (0.9)
---------- ---------- -------------
(7.7) (10.8) (9.5)
---------- ---------- -------------
TOTAL LIABILITIES (106.0) (110.6) (116.5)
---------- ---------- -------------
NET ASSETS 195.4 231.5 196.5
---------- ---------- -------------
EQUITY
Share capital 0.8 0.8 0.8
Share premium 97.9 96.9 97.4
Own shares (0.3) - -
Retained earnings 86.4 109.6 83.5
Foreign exchange differences 10.6 24.2 14.8
---------- ---------- -------------
TOTAL EQUITY ATTRIBUTABLE
TO EQUITY HOLDERS OF THE
PARENT 195.4 231.5 196.5
---------- ---------- -------------
The Interim Financial Information presented in this Interim
Report was approved by the Board of Directors on 4 August 2014.
SDL plc
Interim Condensed Consolidated Statement of Changes in
Equity
Foreign
Share Share Retained Exchange
Capital Premium Own Shares Earnings Differences Total
GBPm GBPm GBPm GBPm GBPm GBPm
At 31 December 2012
(audited) 0.8 96.8 - 114.9 15.3 227.8
Loss for the period - - - (1.4) - (1.4)
Other comprehensive income - - - - 8.9 8.9
-------- -------- ------------ --------- ------------ ------
Total comprehensive income - - - (1.4) 8.9 7.5
Dividend paid - - - (4.9) - (4.9)
Arising on share issues - 0.1 - - - 0.1
Share-based payments - - - 1.0 - 1.0
-------- -------- ------------ --------- ------------ ------
At 30 June 2013
(unaudited) 0.8 96.9 - 109.6 24.2 231.5
-------- -------- ------------ --------- ------------ ------
Loss for the period - - - (26.5) - (26.5)
Other comprehensive income - - - - (9.4) (9.4)
-------- -------- ------------ --------- ------------ ------
Total comprehensive income - - - (26.5) (9.4) (35.9)
Deferred taxation on share based payments - - - 0.2 - 0.2
Arising on share issues - 0.5 - - - 0.5
Share-based payments - - - 0.2 - 0.2
-------- -------- ------------ --------- ------------ ------
At 31 December 2013
(audited) 0.8 97.4 - 83.5 14.8 196.5
-------- -------- ------------ --------- ------------ ------
Profit for the period - - - 1.9 - 1.9
Other comprehensive income - - - - (4.2) (4.2)
-------- -------- ------------ --------- ------------ ------
Total comprehensive income - - - 1.9 (4.2) (2.3)
Own shares acquired - - (0.3) - - (0.3)
Arising on share issues - 0.5 - - - 0.5
Share-based payments - - - 1.0 - 1.0
-------- -------- ------------ --------- ------------ ------
At 30 June 2014
(unaudited) 0.8 97.9 (0.3) 86.4 10.6 195.4
-------- -------- ------------ --------- ------------ ------
These amounts are attributable to equity holders of the parent
Company.
SDL plc
Interim Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
Profit / (loss) before tax 3.1 (2.3) (24.4)
Depreciation of property,
plant and equipment 2.4 2.6 5.1
Amortisation of intangible
assets 3.6 3.8 7.5
Impairment losses on intangible
assets - - 20.4
Finance costs 0.1 0.2 0.5
Finance revenue - - (0.1)
Share-based payments charge 1.0 1.0 1.2
Share based payments cash
outflow (0.6) - -
Decrease / (increase) in
trade and other receivables 4.5 4.1 (2.4)
(Decrease) / increase in
trade and other payables
and provisions (7.0) 0.2 7.8
Exchange differences - - 0.2
---------- ---------- -------------
CASH GENERATED FROM OPERATIONS 7.1 9.6 15.8
Income tax paid (1.5) (4.8) (10.3)
---------- ---------- -------------
NET CASH FLOWS GENERATED
FROM OPERATING ACTIVITIES 5.6 4.8 5.5
CASH FLOWS FROM INVESTING
ACTIVITIES
Payments to acquire property,
plant and equipment (1.3) (5.0) (6.1)
Receipts from sale of property,
plant and equipment - - 0.1
Payment to acquire subsidiaries (0.3) (1.4) (1.4)
Net cash acquired with subsidiaries - 0.2 0.2
Interest received - - 0.1
---------- ---------- -------------
NET CASH FLOWS USED IN INVESTING
ACTIVITIES (1.6) (6.2) (7.1)
SDL plc
Interim Condensed Consolidated Statement of Cash Flows
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
FINANCING ACTIVITIES
Net proceeds from issue of
ordinary share capital 0.4 0.1 0.2
Proceeds from borrowings - 20.0 20.0
Repayment of borrowings (5.0) (22.2) (22.2)
Dividend paid on ordinary
shares - (4.9) (4.9)
Repayment of finance leases (0.1) (0.2) (0.4)
Interest paid (0.1) (0.2) (0.5)
NET CASH FLOWS USED IN FINANCING
ACTIVITIES (4.8) (7.4) (7.8)
---------- ---------- -------------
DECREASE IN CASH AND CASH
EQUIVALENTS (0.8) (8.8) (9.4)
---------- ---------- -------------
MOVEMENT IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents
at start of the period 18.2 28.5 28.5
Decrease in cash and cash
equivalents (0.8) (8.8) (9.4)
Effect of exchange rates
on cash and cash equivalents (0.5) 0.9 (0.9)
Cash and cash equivalents
at end of the period 16.9 20.6 18.2
---------- ---------- -------------
SDL plc
Notes to the Interim Condensed Consolidated Financial
Statements
1. Basis of preparation and accounting policies
Basis of preparation
The annual financial statements of the Group are prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted by the EU. The interim condensed consolidated financial
statements for the six months ended 30 June 2014 have been prepared
on a going concern basis in accordance with IAS 34 Interim
Financial Reporting.
As required by the Disclosure and Transparency Rules of the
Financial Conduct Authority, this condensed set of interim
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 2013.
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 were disclosed in the
Group's annual report and financial statements for the year ended
31 December 2013 and remain broadly unchanged. SDL has an
established process both to manage risk and to seek to mitigate the
impact of risk as much as possible should it materialise.
Operational risks include management succession, system
interruption and business continuity, data protection, compliance,
contract management, integration of acquisitions, maintaining
technology leadership and intellectual property. Financial risks
include liquidity, counterparties, interest rates and financial
reporting.
Going Concern
In line with code requirements the Directors have made enquiries
concerning the potential of the business to continue as a going
concern. Enquiries included a review of performance in 2014, 2014
annual plans, a review of working capital including the liquidity
position and a review of current indebtedness levels. The Directors
confirm 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 interim financial
statements.
2. Segment information
The Group operates in the Customer Experience Management
industry. For management reporting purposes, the Group is organised
into business units based on the nature of their products and
services. Following the consolidation of the Group's reorganisation
in 2013, the Group has two reportable operating segments as
follows:
-- The Language Services segment is the provision of a
translation service for customers' multilingual content in multiple
languages.
-- The Technology segment is the sale of enterprise, desktop and
statistical machine translation technologies, content management
technologies, campaign management, social media monitoring and
marketing analytic technologies together with associated
consultancy and 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 IFRS 8, the operating segments for the
comparative period have been restated to the operating segments
that exist in 2014. Prior year comparatives have also been restated
to present segment costs and profitability on a consistent
basis.
Six months ended 30 June 2014 (unaudited)
Segment
profit /(loss)
before
taxation
External Total and
Revenue Revenue Depreciation amortisation
GBPm GBPm GBPm GBPm
Language Services 72.9 72.9 0.9 11.3
Technology 56.2 56.2 1.5 (4.6)
--------- --------- ------------- ----------------
Total 129.1 129.1 2.4 6.7
--------- --------- -------------
Amortisation (3.6)
----------------
Profit before taxation 3.1
================
Six months ended 30 June 2013 (unaudited) - restated
Segment
profit /
(loss) before
taxation
External Total and
Revenue Revenue Depreciation amortisation
GBPm GBPm GBPm GBPm
Language Services 73.4 73.4 0.7 8.6
Technology 57.6 57.6 1.9 (5.8)
Historic litigation costs - - - (1.3)
--------- --------- ------------- ---------------
Total 131.0 131.0 2.6 1.5
--------- --------- -------------
Amortisation (3.8)
---------------
Loss before taxation (2.3)
===============
Twelve months ended 31 December 2013 (audited) - restated
Segment
profit /
(loss) before
taxation
External Total and
Revenue Revenue Depreciation amortisation
GBPm GBPm GBPm GBPm
Language Services 150.5 150.5 1.7 21.3
Technology 115.6 115.6 3.4 (13.1)
Historic litigation costs - - - (1.4)
Restructuring costs - - - (3.3)
Impairment charge - - - (20.4)
Total 266.1 266.1 5.1 (16.9)
--------- --------- -------------
Amortisation (7.5)
---------------
Loss before taxation (24.4)
===============
Segment assets
Restated Restated
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
Language Services 60.8 59.2 58.9
Technology 214.0 255.8 228.7
Adjustments and Eliminations (1) 26.6 (2) 27.1 (3) 25.4
---------- ---------- -------------
Total 301.4 342.1 313.0
========== ========== =============
(1) Segment assets do not include cash (GBP16.9m), Corporation
Tax (GBP4.5m) and Deferred Tax (GBP5.2m).
(2) Segment assets do not include cash (GBP20.6m), Corporation
Tax (GBP1.9m) and Deferred Tax (GBP4.6m).
(3) Segment assets do not include cash (GBP18.2m), Corporation
Tax (GBP3.5m) and Deferred Tax (GBP3.7m).
Revenue by geographical destination was as follows:
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
United Kingdom 21.0 16.5 37.2
Rest of Europe 44.1 42.4 85.0
USA 42.6 47.9 95.8
Canada 6.5 8.0 15.4
Rest of the World 14.9 16.2 32.7
---------- ---------- -------------
129.1 131.0 266.1
---------- ---------- -------------
3. Operating profit / (loss)
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
Is stated after charging
/ (crediting):
Research and development
expenditure 11.4 12.6 24.8
Bad debt charge 0.2 0.3 0.8
Depreciation of owned assets 2.3 2.4 4.9
Depreciation of leased assets 0.1 0.2 0.2
Amortisation of intangibles 3.6 3.8 7.5
Operating lease rentals for
plant and machinery 0.3 0.2 0.6
Operating lease rentals for
land and buildings 3.1 3.5 6.9
Net foreign exchange differences (0.1) 0.2 -
Share based payment charge 1.0 1.0 1.2
One-off costs
- Historic litigation costs - 1.3 1.4
- Restructuring charges - - 3.3
- Impairment provision - - 20.4
4. Taxation
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
UK corporation tax:
UK current tax on income
for the period 0.4 0.1 0.7
Adjustments in respect of
prior periods 0.3 - 0.2
---------- ---------- -------------
0.7 0.1 0.9
---------- ---------- -------------
Foreign tax:
Current tax on income for
the period 2.8 0.4 4.1
Adjustments in respect of
prior periods (0.1) 0.2 0.3
---------- ---------- -------------
2.7 0.6 4.4
---------- ---------- -------------
Total current taxation 3.4 0.7 5.3
Deferred taxation:
Origination and reversal
of timing differences (2.2) (1.6) (1.8)
Total deferred taxation (2.2) (1.6) (1.8)
---------- ---------- -------------
Tax expense /(income) 1.2 (0.9) 3.5
---------- ---------- -------------
A tax charge in respect of foreign currency translation
differences on foreign currency loans to foreign subsidiaries of
GBP0.2m was recognised in the statement of other comprehensive
income in the six months to June 2014 (June 2013: GBP0.2m credit;
December 2013: GBP0.1m charge).
A tax credit in respect of share based compensation for current
taxation of GBPnil (June 2013: GBPnil; December 2013: GBPnil) has
been recognised in the statement of changes in equity in the
period.
A tax charge in respect of share based compensation for deferred
taxation of GBPnil (June 2013: GBPnil; December 2013: credit of
GBP0.2m) has been recognised in the statement of changes in equity
in the period.
5. Earnings per share
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
Profit / (loss) for the period
attributable to equity holders
of the parent 1.9 (1.4) (27.9)
Number Number Number
Basic weighted average number
of shares (million) 80.6 80.2 80.3
Employee share options and shares
to be issued (million) 0.7 0.3 0.9
---------- ---------- -------------
Diluted weighted average number
of shares (million) 81.3 80.5 81.2
---------- ---------- -------------
Adjusted earnings per share:
Unaudited Unaudited
6 months 6 months Audited
to to Year to
30 June 30 June 31 December
2014 2013 2013
GBPm GBPm GBPm
Profit / (loss) for the period
attributable to equity holders
of the parent 1.9 (1.4) (27.9)
One-off costs - 1.3 25.1
Amortisation of intangible fixed
assets 3.6 3.8 7.5
Less: deferred tax benefit associated
with amortisation of intangible
fixed assets (0.8) (0.9) (2.6)
---------- ---------- -------------
Adjusted profit for the period
attributable to equity holders
of the parent 4.7 2.8 2.1
---------- ---------- -------------
Number Number Number
Basic weighted average number
of shares (million) 80.6 80.2 80.3
Diluted weighted average number
of shares (million) 81.3 80.5 81.2
Pence Pence Pence
Adjusted earnings per ordinary
share - basic (pence) 5.71 3.56 2.57
Adjusted earnings per ordinary
share - diluted (pence) 5.66 3.52 2.54
6. Dividend per share
Dividends paid in the six months ending 30 June 2014 were GBPnil
(June 2013: GBP4.9m; December 2013: GBP4.9m). The dividend paid in
2013 amounted to 6.1 pence per share.
7. Interest-bearing loans
During the period, the Group repaid GBP5.0 million. At 30 June
2014, the Group had a GBP30 million facility with Royal Bank of
Scotland and had drawn down GBP15m of the facility. On 4 August
2014, the Group signed a facility amendment under which the Group
has the option to extend the facility term from September 2015 to
June 2017 as long as agreed performance targets are met.
8. Share-based payments
On 1 January 2014, 53,526 and on 7 April 2014 1,007,429 Long
Term Incentive Plan (LTIP) shares were awarded and on 7 April 2014
227,500 stock options were awarded to certain key senior executives
and employees of the SDL Group. The exercise price of the options
was 333.5 pence, representing the mid-market price on the day
before grant.
9. General notes
The comparative figures for the financial year ended 31 December
2013 are not the Company's statutory accounts for that financial
year. Those accounts have been reported on by the Company's auditor
and delivered to the registrar of companies. The report of the
auditor was (i) unqualified, (ii) did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
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.
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
Dominic Lavelle
Chief Financial Officer
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 2014 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 Conduct Authority ("the UK FCA"). 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 FCA.
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 2014 is not prepared, in all material respects, in accordance
with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Paul Gresham
for and on behalf of KPMG Audit Plc
Chartered Accountants
15 Canada Square
London
E14 5GL
5 August 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VZLFBZVFZBBZ
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