TIDMSDL
RNS Number : 4719J
SDL PLC
14 April 2020
14 April 2020
SDL plc
("SDL" or the "Group")
Final results for the year ended 31 December 2019
A year of further strategic, operational and financial
progress
SDL plc (LSE: SDL), the intelligent language and content
company, announces its full year results for the twelve months
ended 31 December 2019.
2019 Financial Highlights
Audited Results FY19 FY18 Change
12 months to 31 December GBPm GBPm
------- ----- ------
Revenue 376.3 323.3 +16.4%
------- ----- ------
Pro forma (1) +5.3 %
------- ----- ------
Operating profit 29.7 18.9 +57.1%
------- ----- ------
Adjusted operating profit
(2) 37.2 29.0 +28.3%
------- ----- ------
Profit before tax 27.0 18.4 +46.7%
------- ----- ------
Net cash 26.3 14.4 +82.6%
------- ----- ------
Basic earnings per share 21.6p 17.2p +25.6%
------- ----- ------
Diluted earnings per
share 21 . 1p 16.9p +24.9%
------- ----- ------
Adjusted basic earnings
per share (3) 28.1p 24.7p +13.8%
------- ----- ------
Adjusted diluted earnings
per share 27.4p 24.2p +13.2%
------- ----- ------
(1) Pro forma is used for illustrative purposes based on
unaudited management accounts of the pre-acquisition period of
DLS
(2) Adjusted operating profit: Operating profit before
acquisition related amortisation and exceptional items (as
reconciled on the income statement)
(3) Adjusted earnings: Profit after tax before the impact of
exceptional items and acquisition related
amortisation (as reconciled in note 7)
-- Results include maiden full year contribution of the
acquisition of Donnelley Language Solutions ("DLS"), completed in
July 2018
-- All business segments delivered growth in revenues and adjusted operating profit
o Language Services gross margin rose to 42.9% (2018: 42.0%)
-- Before IFRS 16 adjustments, adjusted operating profit was GBP35.6m
-- Strong cash conversion: adjusted cash flow from operations of
GBP50.5m (2018: GBP45.6m), representing cash flow to adjusted
EBITDA conversion of 98% (2018: 133%)
-- Currently gross cash is in excess of GBP98.0m with drawn
credit facilities of GBP63.0m (net cash c. GBP35m)
2019 Operational Highlights
-- Key Performance Indicators:
o Premium Services revenue increased to GBP100.5m (2018:
GBP63.5m), equating to 38% of Language Services revenue (2018:
29%)
o Language Services Repeat Revenue of 96% (2018: 97%) and Annual
Recurring Contract Value of GBP71.9m (2018: GBP67.5m)
-- 280 cross and upsell deals (2018: 220)
-- Progress with Business Process Automation programme:
o 90% of addressable Language Services customer accounts on
Helix by December 2019, enabling a rise in average Linguistic
Productive Utilisation to 67% (2018: 64%) and a reduction in work
outsourced to 59% (2018: 62%)
-- Investment in market-leading innovations, including the
industry's first end-to-end, AI-enabled translation platform, SDL
Language Cloud, which was successfully launched in June 2019
-- Cost-saving programme delivered in-year savings of GBP5.9m and annualised savings of GBP8.5m
Post Year-End Update - COVID-19
-- SDL's Global Business Continuity Plans activated at the end of January 2020
o No degradation to date of SDL's delivery capability for
clients
o Large-scale remote working measures in place in all countries
and regions subject to public health controls. The majority of
staff are either on voluntary or mandatory working from home
arrangements
o Effectiveness of response has been enabled by SDL's
investments in Helix (Business Process Automation platform),
networking and virtualised cloud storage
-- No material direct impact in the first quarter of 2020 on
revenues from the pandemic. However, it is early days for most of
SDL's customers and the Group believes it is prudent to anticipate
a reduction in constant currency revenues across SDL's Language
Services and technology businesses
-- A multi-phased plan is in place to offset some of the impact
of any reductions, depending on the severity and length of the
crisis. Phase 1, equating to cost reductions of GBP8m, is being
executed now
-- As SDL enters a period of uncertainty caused by the COVID-19
pandemic, the Board considers it prudent not to recommend a final
dividend for 2019. SDL will revisit its dividend policy when it has
sufficient clarity of outlook
-- The Group is in a strong financial position. The Group has
access to a GBP70m committed RCF financing facility, plus a GBP50m
accordion facility, which matures in July 2023, and has drawn down
GBP63m on the RCF facility to ensure that it has sufficient
short-term liquidity. Covenants on the RCF are limited to a net
debt to EBITDA ratio of 3:1 and a minimum of 4:1 on EBITDA to
interest. The Board acknowledges that the conservation of funds is
critical at this time of intensified uncertainty and has therefore
taken steps to further strengthen its financial position
-- SDL has modelled a number of different potential scenarios of
different durations and severity, and assessed the impact on both
profitability and cash flow over the next 12 months. With the
actions being taken to preserve cash and the financial resources
available, the Group is well placed to withstand an extended period
of reduced trading, should it occur
-- Full-year financial guidance remains suspended and SDL will
provide further updates as appropriate
Adolfo Hernandez, CEO of SDL plc, said: " SDL's 2019 financial
results reflect a year of successful execution and the hard work
and investments of prior years. We made strong progress against our
strategic objectives. We significantly grew our premium services
revenues, benefited from systems investment and our business
process automation programme, and delivered industry-leading
product innovation, most notably with the launch of SDL Language
Cloud and our world-class Neural Machine Translation product
suite.
"In 2020, SDL has responded at speed and scale to the new
circumstances imposed by the global public health crisis. We have
moved the majority of our employees to home-working and to date
have seen no degradation in service delivery. The feedback from
customers has been very positive. Although normal revenue
performance has persisted to date, it is still too early to assess
the potential impact on sales in the coming quarters. However, it
is prudent to assume that the disruption to business activity
globally could lead to a reduction in sales across Language
Services and SDL's technology businesses. We have therefore put a
phased set of mitigation plans in place. In the first phase, SDL is
taking steps to control variable external costs, discretionary
costs and optimise working capital. We are keeping the situation
under close review and will take further actions as necessary."
Enquiries
SDL plc 01628 410100
Adolfo Hernandez, CEO
Xenia Walters, CFO
Luther Pendragon 0207 618 9100
Harry Chathli, Claire Norbury,
Alexis Gore
Analyst Presentation
Adolfo Hernandez, Chief Executive Officer, and Xenia Walters,
Chief Financial Officer, will be holding a conference call for
analysts and investors this morning at 9.00am BST. For dial-in
details, please contact Rachel So at Luther Pendragon at
RachelSo@luther.co.uk
About SDL
SDL (LSE: SDL) is the intelligent language and content company .
Our purpose is to enable global understanding, allowing
organizations to communicate with their audiences worldwide,
whatever the language, channel or touchpoint. We work with over
4,500 enterprise customers including 90 of the world's top brands
and the majority of the largest companies in our target sectors. We
help our customers overcome their content challenges of volume,
velocity, quality, fragmentation, compliance and understanding
through our unique combination of language services, language
technologies and content technologies.
2019 Operational review
Delivering on strategy
The Group's strategy remains robust and unchanged. SDL's
strategic actions are designed to underpin long-term revenue growth
and margin improvement, but also align with the goals of trading
effectively through the current period of uncertainty.
SDL's strategy is to become the leader in content globalisation,
by deploying its services and technology platforms to help
customers create, translate and deliver their content globally,
whatever the purpose of that content, wherever it sits in an
organisation and whoever the intended audience is. Helping
enterprises and organisations achieve this content digital
transformation requires an extensive toolkit and a highly
customer-centric approach from SDL. The Group's six long-term
strategic objectives encompass the model and capabilities that SDL
is building to achieve this.
1. Build deep relationships with customers
SDL's 4,500 enterprise customers include many of the world's
largest companies, across a variety of industries and SDL sees
significant opportunities to grow its revenues by deepening its
strategic relationships with these customers, to help them solve
their global content challenges. Achievements in 2019 include:
-- Top 10 customer accounts grew by 30%, and top 20 by 27% (19%
and 17% respectively on a pro forma basis)
-- Top 10 Regulated Industries customer accounts grew by 107% (14% on pro forma basis)
-- Completed 280 cross-selling or upselling deals (2018: 220)
-- Further increase in customer Net Promoter Score (NPS) to 36 (2018: 30)
-- Repeat Revenue Rate in Language Services business was 96% (2018: 97%)
-- Renewal rate across Language and Content Technologies was 91% (2018: 90%)
In 2020, SDL continues to focus on higher growth customers and
segments, including the premium services sector, with the aim of
increasing sales per customer and expanding its customer base. In
support of this, SDL has made important investments in its sales
teams to equip them to increase the depth of engagement with its
target customers. More than ever, SDL believes there is an
opportunity to engage with customers to tackle the effectiveness
and efficiency of their global content strategies.
2. Be the world's best Language Service Provider
Through a combination of high-quality expert resources, smart
processes and technology-enabled innovation, SDL aims to deliver
leadership in the Language Services industry. Achievements in 2019
include:
-- Premium Services revenue increased to GBP100.5m (2018:
GBP63.5m), equating to 38% of Language Services revenue (2018:
29%)
-- 1.4bn human translated words; 300bn machine translated words
-- Customers on-boarded to Helix grew to 90% of addressable
accounts by December 2019, from 60% at the start of the year
-- Standardisation of processes reduced new customer on-boarding
times from six weeks to just under a week
-- Helix enabled the Group to create 'virtual' linguistic teams
to provide round-the-clock service
-- Significant investment in security accreditations and
certifications to support Regulated Industry requirements,
including certification of SDL's Translation Management Software as
HITRUST-compliant for the Healthcare industry
In 2020, SDL continues to focus on the core elements of service:
quality, responsiveness and fast turnaround, underpinned by the
Group's extensive technology capabilities. Since the start of 2020,
SDL has been able to demonstrate its resilience to its customers
and believes this stands the Group in good stead for the short and
long term.
3. Be the leader in Language and Content Technologies
Technology is a critical part of SDL's offering and market
differentiation and the Group has put innovation back at the heart
of the company's strategy and is now delivering tangible results.
Achievements in 2019 include:
-- Launch of flagship Language Technologies platform, SDL
Language Cloud, an end-to-end cloud solution that brings together
SDL's robust translation management capabilities with cutting-edge
neural machine translation ("NMT") and artificial intelligence
("AI"), and SDL Trados Studio
-- Significant progress in SDL's proprietary NMT technology,
which now spans 131 language pairs (2018: 82). Release of
industry-first on-premise engine trainer for NMT. Successful
migration of Cloud Statistical MT customers to new Cloud Neural MT
product
-- SDL Trados Studio development was focused on its first cloud
subscription service that is due to be launched in 2020
-- SDL Tridion made significant progress in executing its
strategy of best-of-breed integrations, 'Content as a Service' and
Agile Content Management Service, with strong interest from
customers in the areas of structured content management for
intelligent content services and knowledge management
In 2020, SDL Language Cloud will deliver a frequent cadence of
new features and functionality and SDL aims to begin to establish
it as the industry's leading Translation Management platform. 2020
will also see the introduction of the first SDL Trados subscription
service and a new collaboration platform based on SDL Language
Cloud. Within Neural Machine Translation, the Group will continue
to focus on areas such as scalability and integrations, intelligent
adaptation and predictive quality. SDL expects these innovations to
contribute to sustainable growth in Language Technologies,
providing customers with easier than ever access to localisation
solutions.
In Content Technologies, SDL will bring next-generation
innovation to market in its SDL Contenta Publishing Suite. SDL
Tridion will deliver more intelligent, personalised content
experiences, including through the incorporation of Linguistic AI
tools.
4. Be the leader in solutions in target premium sectors
By bringing together its services and technologies, SDL can
provide differentiated solutions to meet the toughest global
content challenges of customers in its target premium sectors.
These solutions expand SDL's offering beyond traditional use-cases
and into new buying centres. Achievements in 2019 include:
-- Global audit content management solution for a major
accountancy firm achieved its first live production deployment and
has been enhanced with Translation Management and Neural Machine
Translation
-- Further success for SDL solutions in the Clinical Research
Organisation (CRO) market, where SDL provides a scalable,
centralised and secure solution for digital assets, fully
integrated with localisation services and technologies. In 2019,
SDL secured wins with a major global CRO and with new divisions of
existing customers
-- Several enhanced solutions for Regulated Industries,
including SDL Secure Translation Solutions, the integration of SDL
NMT into RelativityOne (legal e-Discovery) and the integration of
SDL TMS with Veeva Vault (life sciences content management
system)
-- Increasing traction with Regulated Industries customers for
SDL's wider portfolio of offerings
In 2020, SDL will continue to develop new solutions for its
target markets.
5. Enable SDL's people to be their best
Located in 62 offices around the world, SDL's 4,300 employees
represent a diverse talent pool and the Group's most valuable
resource. The recruitment, nurturing and retention of the best
people in the industry will be fundamental to SDL's success over
the long term. Achievements in 2019 include:
-- Formalisation of Employee Survey, which had an 86% response
rate and favourable results across all surveyed areas
-- Rollout of Foundations of Leadership training programme,
taken by nearly 200 employees in 2019
-- Promotion of Life@SDL staff and cultural engagement programme
-- Increase in uptake of volunteering days by 270%
-- Strengthening of agile working and business continuity
processes and policies, which have enabled an effective response to
events in 2020
SDL's employees have already shown an incredible response to the
changing conditions since the start of the year. The Group's
priority is the safety and wellbeing of its employees and the
primary objective is to support them through the current period of
uncertainty.
6. Achieve target operating model
SDL's target operating model is global, customer-oriented,
agile, automated and data-driven. In 2019, SDL's primary areas of
focus to achieve its target operating model were:
-- The continued roll-out and adoption of Helix and Insight,
SDL's data platform, to support business processes in Language
Services
-- The first stages of the integration of DLS, which have
included operating model alignment and system and back-office
integration
-- The implementation of SDL's 2019 cost-saving plan, including
the streamlining of Group back office functions and centralisation
and standardisation of processes
o Delivered GBP8.5m of annualised cost savings from the combined
business, of which GBP5.9m were in-year, enabling SDL to re-invest
in growth areas
-- A reduction in adjusted operating costs as a percentage of sales to 42.2% (2018: 43.2%)
In 2020, SDL continues with its long-term programmes that are
designed to improve the structural margin of the Group. As noted
above, a number of additional actions are underway to control costs
in response to market conditions.
The impact of the COVID-19 pandemic on SDL's strategy
At the end of January 2020, SDL invoked its Global Business
Continuity Plans in response to the COVID-19 pandemic. SDL has
remote working measures in place in all countries subject to public
health controls and the majority of SDL's employees are currently
working from home. The substantial majority of tasks that SDL
employees perform do not require them to be physically present in
any one location and therefore there are no material impacts on the
Group's business model. To date, there has been no degradation in
SDL's delivery capability for clients and the Group has received
positive feedback from customers about SDL's continued high quality
service levels and responsiveness. SDL continues to work hard to
ensure its employees are fully supported in remaining safe, well
and able to work.
The effectiveness of SDL's response has been enabled by the
significant investments the Group has made in recent years, which
have included: the overhaul of networks, infrastructure and
storage; flexible working policies; and global business continuity
policies and processes. The adoption of Helix and virtualised
applications and storage on the cloud has enabled easier and secure
remote working, hand-over of tasks between offices and virtual
teaming to preserve service delivery.
In the year to date, SDL has not yet seen a material change in
revenue or pipeline, but there are signs of slower decision making.
However, it is early days for most of SDL's customers. Therefore,
although SDL has a high recurring revenue and the nature of its
software products is very sticky, it is prudent to anticipate a
reduction in constant currency revenues across SDL's Language
Services and technology businesses. The Group has developed a
phased plan to offset some of the impact of reduced revenues,
depending on the severity and length of the crisis.
Phase one of this plan is expected to reduce costs (cost of
sales and operating costs) by GBP8m in-year compared to budget,
through a combination of cost control actions, such as reducing
external variable costs and discretionary spend.
Further action on costs will be taken if necessary. SDL's
financial objective is to maintain the short and long-term
financial health of the business.
Conclusion
In 2019, SDL delivered many tangible benefits from its
transformation and investment activities and expects these to bring
the Group further advantages in the future. Despite the new
challenges encountered in 2020, SDL's core strategy remains robust
and unchanged. SDL is strengthening its go-to-market model by
focusing on solutions and differentiated value propositions,
benefiting also from the addition of the expertise of the former
DLS teams. The Group has invested in its offering, including
service innovation and technology portfolio, most notably with the
release in 2019 of its next-generation Translation Management
Software platform, SDL Language Cloud. Operationally, the Group has
continued with the rollout of Helix and to optimise its back office
functions to make SDL a more automated, scalable, flexible and
resilient business.
Today, SDL is well positioned in large markets showing long-term
growth and with a set of technologies, services and solutions to
meet its customers' evolving needs. The Board believes that the
actions taken to date, along with the further work to be undertaken
to achieve the Group's strategic objectives in 2020, will create a
differentiated and sound business for the long term.
Segmental performance
GBPm Language Services Language Technologies Content Technologies
2019 2018 2019 2018 2019 2018
----------------- ----- ------ ------- ------ ------- -------- ------ ------ --------
+20.1 +9.6
Revenue 262.1 218.2 % 53.6 49.8 +7.6% 60.6 55.3 %
----------------- ----- ------ ------- ------ ------- -------- ------ ------ --------
+22.6 +5.9 +11.0
Gross profit 112.4 91.7 % 41.1 38.8 % 42.5 38.3 %
----------------- ----- ------ ------- ------ ------- -------- ------ ------ --------
(83.9 ( 22.1 (30.9 ( 29.3 ( 5.5 (26.4 (23.4 ( 12.8
Admin. expenses ) (68.7) %) ) ) %) ) ) %)
----------------- ----- ------ ------- ------ ------- -------- ------ ------ --------
Adj . operating +23.9 7 . 4
profit 28.5 23.0 % 10.2 9.5 % 16.1 14.9 +8.1%
----------------- ----- ------ ------- ------ ------- -------- ------ ------ --------
Adj. operating
profit pre IFRS +18.7 +5.3
16 27.3 23.0 % 10.0 9 . 5 % 15.9 14.9 +6.7%
----------------- ----- ------ ------- ------ ------- -------- ------ ------ --------
76.7 ( 120bps 70.1
Gross margin 42.9% 42.0% +90bps % 77.9% ) % 69.3% +80bps
----------------- ----- ------ ------- ------ ------- -------- ------ ------ --------
Adj. operating 19.0 (10bps 26.6 (30bps
margin 10.9% 10.5% +40bps % 19.1% ) % 26.9% )
----------------- ----- ------ ------- ------ ------- -------- ------ ------ --------
Adj. operating
margin pre IFRS 10.4 18.6 (50bps 26.2
16 % 10.5% (10bps) % 19.1% ) % 26.9% (70bps)
----------------- ----- ------ ------- ------ ------- -------- ------ ------ --------
Footnote: IFRS 16 was adopted with effect from 1 January 2019.
The 2018 comparatives have not been restated for the impact of IFRS
16
1. Language Services
SDL is one of the world's largest Language Service Providers,
with more than 1,400 in-house translators and a pool of over 17,000
freelancers and vendors. It provides a full suite of services to
localise content and make it relevant for global audiences.
Language Services delivered revenue growth of 20.1% to
GBP262.1m. This included the full year contribution of the acquired
business of DLS.
Revenue from premium sectors (Regulated Industries and Marketing
Solutions) increased by GBP37.0m to GBP100.5m (2018: GBP63.5m) and
accounted for 38% (2018: 29%) of total Language Services revenues.
The Group's Regulated Industries practice (Financial Services, Life
Sciences and Legal) recorded 11% pro forma growth for 2019,
expanding its footprint in existing accounts, cementing a strong
SDL brand in the regulated space and leveraging SDL's technologies
to deliver competitive solutions. This approach led to important
wins in the fund management, medical devices and pharmaceutical
sectors in the year.
Revenue from Commercial Enterprise (non-regulated) markets was
broadly flat year-on-year on a pro forma basis. Positive growth in
the Americas region offset weaker demand in European markets due to
uncertainly around Brexit, difficult economic conditions in Germany
and softening demand within the automotive and manufacturing
sectors impacting revenues in EMEA.
Language Services gross margin increased to 42.9% (2018: 42.0%)
driven by sales mix and productivity gains. Adjusted operating
profit was GBP28.5m (2019: GBP23.0m), representing an operating
margin of 10.9%. The IFRS 16 benefit amounted to GBP1.2m. This
year-on-year improvement reflects the increased adoption of SDL's
business process automation platform (Helix), optimisation of the
resourcing model with the DLS acquisition, and continued strong
usage of Machine Translation. These initiatives have led to a
reduction in the use of external linguists and improved
productivity from the Group's internal operations, which is
evidenced by the increased productivity among its linguistic
community where Linguistic Productive Utilisation (amount of
billable time spent on customer-related projects) has increased to
67% for 2019 (2018: 64%).
Language Services Process Automation
The Helix business process automation programme made good
progress during the year in the areas of process simplification,
automation and data utilisation. The percentage of customers
on-boarded to Helix grew from 60% of addressable accounts at the
start of the year to 90% by December 2019. This included new client
wins, the majority of which are on-boarded to Helix on day one. For
20% of the on-boarded customers, SDL is now able to use 'Straight
to Translation' processes, which reduces project management time by
up to 25%. Together with improved data on internal and external
workloads and vendor performance, SDL has reduced the percentage of
external production to 59% of total spend (2018: 62%), despite
higher volumes. SDL's use of its data platform, Insight, continues
to evolve and increase in sophistication, with data used internally
and by some customers.
2. Language Technologies
This segment includes three product groups: Neural Machine
Translation, Translation Management Systems and Translation
Productivity.
Language Technologies delivered revenue growth of 7.6% to
GBP53.6m. Gross margin was slightly impacted by sales mix and
licence type at 76.7% (2018: 77.9%). Renewal rates were 89% (2018:
88%).
Net administrative expenses of GBP30.9m were GBP1.6m higher than
2018 mainly due to incremental R&D spend. Adjusted operating
profit of GBP10.2m (2018: GBP9.5m) represents an operating margin
of 19.0% (2018: 19.1%). The IFRS 16 benefit amounted to
GBP0.2m.
Neural Machine Translation (NMT)
NMT sales grew by 22%. NMT is designed to help customers address
two challenges: internal communication and collaboration, and
multilingual analytics and content intelligence. 2019 was a
turnaround year for NMT, following periods of intense innovation in
neural technologies, which enabled a step change in translation
output quality across a wide number of languages.
Translation Management Systems (SDL Language Cloud, SDL TMS, SDL
Worldserver, SDL Multi Trans)
Year-on-year sales increased by 20%. The major focus of 2019 was
the release of SDL's next-generation cloud Translation Management
Software, SDL Language Cloud. The cloud-based platform will
continue to see further advances in 2020, with a continuous release
cycle.
Translation Productivity (SDL Trados)
Year-on-year sales contracted by 4%. 2018 was a strong
comparator period due to the 2019 SDL Trados Studio launch in July
2018 and a lower value of upgrade sales in 2019. Geographically,
growth in Asia and North America was offset by a softening in
demand within the Central European region, in particular tougher
trading conditions in the German and Swiss manufacturing industries
due to Brexit-related uncertainty.
3. Content Technologies
SDL's Content Technologies segment delivers web and structured
content management solutions. It comprises SDL Tridion, SDL
Contenta and SDL XPP. Content Technologies delivered revenue growth
of 9.6% to GBP60.6m with a strong sales performance in the
government and defence sector. Renewal rates were 92% (2018: 89%).
Net administrative expenses of GBP26.4m were GBP3.0m higher than
2018 due to amortisation on previously capitalised R&D.
Adjusted operating profit of GBP16.1m represents an operating
margin of 26.6% (2018: 26.9%). The IFRS 16 benefit amounted to
GBP0.2m.
Financial Review
Group results
GBPm (unless stated otherwise) 2019 2018(1)
Revenue 376.3 323.3
------- -------
Gross profit 196.0 168.8
------- -------
Adjusted administrative expenses (158.8) (139.8)
------- -------
Adjusted operating profit 37.2 29.0
------- -------
Amortisation of acquired intangibles (4.4) (2.4)
------- -------
Exceptional items (3.1) (7.7)
------- -------
Statutory operating profit 29.7 18.9
------- -------
Net finance expense (2.7) (0.5)
------- -------
Tax charge (7.4) (3.6)
------- -------
Profit for the year 19.6 14.8
------- -------
Adjusted Basic EPS 28.1p 24.7p
------- -------
Adjusted Diluted EPS 27.4p 24.2p
------- -------
Statutory Basic EPS 21.6p 17.2p
------- -------
Statutory Diluted EPS 21.1p 16.9p
------- -------
(1) IFRS 16 was adopted with effect from 1 January 2019. 2018
comparatives have not been restated for the impact of IFRS 16
This release provides alternative performance measures ("APMs")
which are not defined or specified under the requirements of
International Financial Reporting Standards ("IFRS"). The Group
uses APMs to improve the comparability of information between
reporting periods and divisions, by adjusting for certain items
which impact upon IFRS measures, to aid the user in understanding
the activity taking place across the Group's businesses. APMs are
used by the Directors and management for performance analysis,
planning, reporting and incentive purposes. A summary of APMs used
is given in note 11.
Revenue
Group revenue in 2019 was GBP376.3m, an increase of 16.4% on a
reported basis, 13.8% on a constant currency basis and 5.3% on a
pro forma basis. Growth came from the full year contribution of the
DLS acquisition and continued growth within the underlying
business. All divisions delivered year-on-year improvement in
revenues.
2019 2018 Reported growth Pro forma growth
----------------
GBPm GBPm At actual At constant At actual rates
rates currency
----- ----- --------- ----------- ----------------
Language Services 262.1 218.2 +20.1 % +17.4 % +4.7 %
----- ----- --------- ----------- ----------------
Language Technologies 53.6 49.8 +7.6% +6.2 % +3.4 %
----- ----- --------- ----------- ----------------
Content Technologies 60.6 55.3 +9.6 % +6.8 % +9.7 %
----- ----- --------- ----------- ----------------
Group 376.3 323.3 +16.4 % +13.8% +5.3 %
----- ----- --------- ----------- ----------------
Gross profit
Gross profit increased by 16.1% to GBP196.0m, representing a
gross margin of 52.1%. Gross profit margin within SDL's largest
division, Language Services, improved from 42.0% in 2018 to 42.9%
in 2019, including the impact of the DLS acquisition. Gross profit
margin within Language Technologies of 76.7% was lower than the
prior year margin of 77.9%, while Content Technologies improved
from 69.3% to 70.1%. The margin variation is driven by the mix of
licence revenues between SaaS, perpetual and term licences.
Adjusted administrative expenses
Adjusted administrative expenses increased by GBP19.0m to
GBP158.8m. These expenses exclude the impact of exceptional items
and acquisition-related amortisation. Incremental administrative
expenses relating to DLS amounted to GBP10.5m, with the remaining
increase in costs driven by cost inflation of GBP5.1m, increased
R&D spend of GBP5.7m and other costs amounting to GBP5.2m, such
as increased marketing activity, new office costs, professional
fees and system operating costs. SDL's 2019 cost-saving programme
delivered in-year savings of GBP5.9m and annualised savings of
GBP8.5m. Over half of these savings were delivered through
combining the DLS business into the existing operating model and
the balance was generated through facility rightsizing, back office
restructuring and further offshoring. The benefit of GBP1.6m
relating to IFRS 16 is included within general administration
expenses and reported within each division.
R&D expenditure includes GBP20.5m (2018: GBP17.6m) of
operating costs and amortisation of GBP3.9m (2018: GBP1.1m).
Capitalised development costs of GBP7.5m (2018: GBP7.6m) are held
on the balance sheet and amortised over the expected useful lives
of the development projects concerned, which is approximately three
years. Year-on-year R&D spend increased by GBP2.8m to GBP28.0m.
The Group expects to capitalise development costs of approximately
GBP9.0m per annum in the mid-term.
Sales and marketing costs of GBP56.7m (2018: GBP52.8m) includes
direct costs for specific sales teams as well as general sales and
marketing costs that are allocated across the divisions.
General administration expenses of GBP77.7m (2018: GBP68.3m)
include all of the Group, regional and local support functions. The
increase is as a result of acquired DLS costs, IFRS 2 charge
(Share-Based Payments) and additional variable compensation offset
by headcount restructuring savings. The IFRS 2 charge amounted to
GBP2.4m (2018: GBP1.9m).
Adjusted administrative expenses as a percentage of revenue were
42.2% (2018: 43.2%). Staff costs make up a large proportion of this
cost base accounting for approximately 70% of total administrative
expenses. This percentage flexes in line with movements in variable
staff compensation.
Analysis of cost by function is set out below:
2019 2018
GBPm GBPm
R&D 24.4 18.7
Sales and Marketing 56.7 52.8
General Administration 77.7 68.3
Total adjusted administrative expenses 158.8 139.8
Adjusted operating profit
Adjusted operating profit, which is operating profit before
exceptional items and amortisation of acquired intangibles, was
GBP37.2m (9.9% margin), and GBP35.6m (9.5% margin) on a
like-for-like basis pre-IFRS 16 (2018: GBP29.0m).
Amortisation of acquired intangibles
Statutory operating profit is reported after the amortisation of
acquired intangibles and exceptional items.
Acquired intangibles include software and customer relationships
arising from acquisitions. These are amortised over periods of
between 18 months and 15 years. The amortisation charge relating to
acquired intangibles in 2019 was GBP4.4m (2018: GBP2.4m). The
GBP2.0m increase reflects the full year impact of the amortisation
of DLS-related intangibles.
Amortisation on internally generated assets, namely capitalised
development spend and Helix, is treated as an expense in arriving
at adjusted operating profit of GBP37.2m. In general, capitalised
development spend is amortised over three years and Helix is
amortised over 10 years. By 2021, capitalised development spend and
amortisation on the financial statements is expected to be broadly
neutral.
Exceptional items
The Group incurred exceptional items in the year amounting to
GBP3.1m of which GBP2.5m related to redundancies and other
associated charges in respect of changes to the organisational
design of the business. As a result of operational improvements and
systems changes, the business reduced back office costs. These
restructuring charges are in line with communication made to the
Group's investors at the start of last year.
Acquisition-related costs of GBP0.1m include charges relating to
the integration of marketing teams and acquisition-related
retention bonuses offset by a GBP0.9m exceptional credit relating
to the settlement of indemnity claims and fair value adjustments.
Other exceptional costs of GBP0.5m relate to settlement costs in
relation to historic tax issues.
Net finance expense
Net finance expense was GBP2.7m (2018: GBP0.5m). GBP1.1m relates
to interest and the amortisation of facility fees on borrowings in
relation to the DLS acquisition and GBP1.6m are finance costs on
lease liabilities under IFRS 16.
Tax charge and effective tax rate ('ETR')
The Group's tax charge for the year was GBP7.4m (2018: GBP3.6m),
representing a statutory tax rate of 27.4% (2018: 19.6%). The prior
year included a one-off deferred tax credit on US losses of GBP1.2m
which, based on the GBP18.4m of profit in 2018, had an ETR
reduction effect of 6%.
The corporate income tax rates in the overseas countries in
which the Group operates continue to be higher than the UK
corporate income tax rate of 19% (2018: 19%), which results in a
Group effective rate higher than the headline UK rate. The ETR
going forward is expected to be approximately 25%.
Profit after tax
The Group delivered a 32.4% increase in profit after tax to
GBP19.6m, driven principally by growth in the Language Services
business, which included the full year contribution of the DLS
acquisition.
Earnings per share
Basic earnings per share for the year increased from 17.2p to
21.6p, an increase of 25.6%. Adjusted basic earnings per share
increased 13.8% from 24.7p to 28.1p. The weighted average number of
shares increased from 86.1m to 90.8m principally due to the equity
placing that occurred part-way through 2018 to finance the DLS
acquisition.
Cash flow and financing
Adjusted operating cash flow before exceptional items was
GBP50.5m (2018: GBP45.6m) representing a cash conversion ratio
against EBITDA of 98%. Working capital before the impact of
exceptional items was an outflow of GBP1.1m in 2019 compared with
an inflow of GBP11.3m in the prior year principally due to
performance on variable compensation plans. The cash impact of
exceptional items amounted to GBP2.7m (2018: GBP6.8m).
Total capital expenditure of GBP15.5m includes payments for
maintenance capital expenditure (GBP5.6m), development spend
(GBP7.5m) and investment capital expenditure on Helix (GBP2.4m).
Further Helix enhancements will be delivered in 2020 at a cost of
GBP2m to GBP3m.
Corporation tax paid amounted to GBP7.1m (2018: GBP2.8m), with
the increase driven by catch up on historic underpayments in the
Group's overseas territories. Tax payable in 2020 is expected to be
approximately GBP7m. Dividends of GBP6.3m paid in the year (2018:
GBP5.1m) comprised the dividend for 2018 of 7.0p per ordinary
share.
During the year, GBP1.3m was received from Donnelly Financial
Solutions in relation to an indemnity claim in respect of DLS.
Cash balances at the year-end amounted to GBP26.3m with external
borrowings of GBPnil (2018: GBP19.8m cash and external borrowings
of GBP5.4m).
Cash flow
2019 2018
GBPm GBPm
Adjusted operating profit 37.2 29.0
Depreciation and amortisation from non-acquired
intangibles 14.4 5.3
Adjusted EBITDA(1) 51.6 34.3
Working capital and share-based payments charge
(excluding exceptionals) (1.1) 11.3
Adjusted operating cash flow from operations
before exceptional items 50.5 45.6
Exceptional items (2.7) (6.8)
Operating cash flow 47.8 38.8
Maintenance capital expenditure (5.6) (2.2)
Capitalised development costs (7.5) (7.6)
Interest and taxation paid (7.8) (4.2)
Investment capital expenditure (2.4) (4.6)
Dividends paid (6.3) (5.1)
Receipts/(Payments) in relation to DLS (net
of cash acquired) 1.3 (59.2)
Repayment of lease liabilities (7.0) -
Proceeds from share issues - 35.4
Proceeds from borrowings 26.0 19.6
Repayments of borrowings (31.4) (14.4)
FX on cash (0.6) 0.6
Net cash inflow/(outflow) 6.5 (2.9)
Opening cash at 1 January 19.8 22.7
Closing cash at 31 December 26.3 19.8
(1) Adjusted EBITDA - profit before tax, interest, depreciation,
amortisation of acquired intangibles and exceptional items.
Treasury and financing
SDL manages its financing and tax planning activities centrally
to ensure that the Group has an appropriate structure to support
its geographically diverse business. It has clearly defined
policies and procedures with any substantial changes to the
financial structure of the Group, or to its treasury practice,
referred to the Board for approval. The Group operates strict
controls over all treasury transactions. The Group does not hedge
against forecast future foreign currency transactions or the
translation of its foreign currency profits and the statutory
results are therefore impacted by movements in exchange rates. The
average rates used to translate the consolidated income statement
are below.
Average exchange 2019 2018
rates
Euro (EUR ) 1.14 1.13
US Dollar ($) 1.28 1.34
The principal exposures of the Group are to the US Dollar and
Euro with approximately 50% of the Group's revenue being
attributable to the US Dollar and 25% of Group costs being Euro
denominated.
A portion of the Group's foreign currency net assets are
naturally hedged using the Group's multi-currency borrowing
facilities.
The Group has in place a five-year GBP120m revolving credit
facility (RCF), expiring on 19 July 2023, of which GBP70m is
committed. The agreement includes a GBP50m accordion (uncommitted)
facility. This facility is provided by HSBC and Lloyds and is
subject to covenants that, if breached, would result in the
facility becoming repayable on demand. At 31 December 2019, no
amounts were drawn on the facility. In March 2020, the Directors
drew down a total of GBP63.0m of the Group's bank facility to
ensure continued liquidity in the face of any potential banking
crisis and potential unforeseen liquidity issues as a result of
COVID-19.
The Group was in compliance with the financial covenants of its
facilities at 31 December 2019 and throughout the year.
Balance sheet and working capital
Net assets at 31 December 2019 increased by GBP6.9m to GBP252.5m
(2018: GBP245.6m), following the growth in the business.
Trade and other receivables at 31 December 2019 decreased by
GBP6.7m to GBP101.6m (2018: GBP108.3m). Days' sales outstanding
(DSO) calculation reflect the number of days' billings in debtors.
DSO calculated under this basis was 55 days (2018: 58 days).
Trade and other payables of GBP92.5m (2018: GBP105.1m) includes
deferred income of GBP37.7m (2018: GBP39.8m). Supplier payment days
were 24 days (2018: 26 days). Accruals of GBP39.4m (2018: GBP46.5m)
were lower than the prior year primarily due to variable
compensation plans and reduced accruals following the integration
of the DLS acquisition.
Impact of IFRS 16
IFRS 16 is the new lease accounting standard and was implemented
on 1 January 2019. The most significant impacts of the new
accounting standard are the recognition of operating lease
liabilities on the balance sheet and the segmentation of the lease
charge into depreciation and interest.
As a result of the initial application of IFRS 16, in relation
to the leases that were previously classified as operating leases,
the Group recognised GBP30.5m of right-of-use assets and GBP32.5m
lease liabilities as at 1 January 2019.
The Group has elected not to restate the 2018 comparatives in
line with the transitional exemptions available. As a result of
IFRS 16, the Group has recognised depreciation and interest costs
instead of operating lease expense. During the year ended 31
December 2019, the Group recognised GBP6.0m of depreciation charges
and GBP1.6m of interest costs from these leases.
Brexit impact
The Group operates in a range of end-user markets that may be
affected by Brexit developments in the future. Although the outcome
of Brexit is difficult to quantify, SDL does not expect the direct
consequences of Brexit to have a material impact on the Group.
However, there may be other legal, regulatory and commercial
ramifications, the likely impact of which are difficult to measure
until a final trade agreement is in place between the UK and the
EU.
SDL has a Brexit steering group that monitors developments and
pays attention to any emerging details relating to changes required
by virtue of the UK leaving the EU. The Group is aware that a
number of areas will change irrespective of the outcome of
negotiations and a number of tax impacts fall into this category.
SDL's tax team is reviewing Brexit implications to make sure that
tax impacts are integrated into business decision making. Due to
the Group's diversified geographical footprint, and the
characteristics of the industry sectors in which the Group
operates, SDL believes that it is well positioned to manage any
negative impact.
COVID-19 response
The Group is closely monitoring the ongoing developments in
relation to the COVID-19 pandemic.
As is prudent, the Group is taking actions to manage short-term
cost control and optimise working capital while ensuring the
business remains on a sound footing in the long-term. This includes
reducing operational costs, limiting capital expenditures and
optimising cash flows.
The Board is taking a prudent approach to preserve the Group's
liquidity and cash position including not recommending a final
dividend for 2019.
Viability statement
In accordance with the 2016 UK Corporate Governance Code, the
Directors have assessed the viability of the Group over a
three-year period, taking account of the Group's current financial
and trading position, the principal risks and uncertainties and the
three-year strategic plans that are reviewed annually by the
Board.
Based on this assessment, the Directors confirm that they have a
reasonable expectation that the Group will be able to continue in
operation and meet its liabilities as they fall due over the period
from the date of this announcement to 31 December 2022.
The Directors believe that a three-year period is an appropriate
period over which a reasonable expectation of the Group's longer
term viability can be evaluated and is aligned with the Group's
business and strategic planning time horizon. It reflects the
nature of the Group's key markets, its businesses and products and
its limited order visibility. Whilst the Directors have no reason
to believe that the Group will not be viable over a longer period,
they believe that the three-year period presents readers of the
final results announcement with a reasonable degree of confidence.
The Group's strategic and financial planning process reflects the
Directors' best estimate of the future prospects of the Group, but
they have also considered the resilience of the Group across a
number of severe but plausible scenarios, taking into account the
principal risks facing the Group, and the likely effectiveness of
any mitigating actions. The Board reviews these risks in detail
throughout the year, and the Audit Committee has a structured
programme for the review of risks and mitigating actions. The
following scenarios were applied to the most recent Strategic Plan
which was reviewed by the Board in March 2020: loss of significant
amounts of revenue and gross margin; additional working capital
requirements; significant adverse movements in foreign exchange
rates; Brexit (the UK leaving the EU without an agreed trade deal);
and the current outbreak of COVID-19. The Directors' assessment
considered the potential impacts of these scenarios, both
individually and in combination, on the Group's business model,
future performance, solvency and liquidity over the period.
In respect of COVID-19, the Directors have modelled a number of
scenarios to the most recent Strategic Plan, and considered those
scenarios which in their view, were considered severe but
plausible. The Directors prepared these scenarios based on
underlying sector by sector analysis of the potential impact of
COVID-19 in the short-term, including a three-month, six-month and
nine-month lockdown scenario, and any impact of COVID-19 on future
years' growth. The Directors have considered the mitigating actions
below and have considered that these would be effective. The
Directors have also considered the impact of COVID-19 on the
liquidity of the Group and the Group's banking covenants.
The results of the sensitivity analysis, which also included
stress testing of the Strategic Plan, demonstrated that as a result
of the Group's strong cash generation it was able to maintain
sufficient cash headroom to accommodate the above scenarios, both
individually and in combination. This is supported by the fact that
the Group sells a wide portfolio of different products across a
diverse set of industries and geographies, has a global supply
chain network, and has well-established relationships with its
customers.
The Directors have prepared cash flow forecasts for a period of
at least the next twelve months that could arise if revenues were
to reduce compared with the expectations set at the year-end. These
scenarios include a revenue decline of 20% for a period of six
months, which the Directors believe to be a severe but plausible
scenario. All of the Group's revenue reduction modelling is
accompanied by a multi-phased cost reduction plan.
Whilst the Directors believe the above scenario is unlikely, in
order to test the robustness of the business, the Directors have
also prepared a further downside scenario which assumes a 35%
reduction in revenue for six months followed by a phased return in
Q4. In such a case, which the Directors believe is highly unlikely,
further cost reduction actions, which are all in the control of the
Directors, would be instigated.
Mitigation actions considered as part of this stress testing
included further cost reductions, tight control of working capital,
and reduction in nonessential capital expenditure. The Directors
consider that under each of the scenarios, the mitigating actions
would be effective and sufficient to ensure the continued viability
of the Group. The Directors have also considered the Group's
capacity to remain viable after consideration of future cash flows,
expected debt service requirements, undrawn facilities and access
to capital markets.
The Group has in place a five-year GBP120m revolving credit
facility (RCF), expiring on 19 July 2023, of which GBP70m is
committed. The agreement includes a GBP50m accordion (uncommitted)
facility. At 31 December 2019, no amounts were drawn on the
facility. In March 2020, the Directors drew down a total of
GBP63.0m of the Group's bank facility to ensure continued liquidity
in the face of any potential banking crisis and potential
unforeseen liquidity issues as a result of COVID-19.
Consolidated Statement of Profit or Loss for the Year Ended 31
December 2019
2019 2018(1)
Note GBPm GBPm
Revenue 376.3 323.3
----- -------- --------
Cost of sales (180.3) (154.5)
----- -------- --------
Gross profit 196.0 168.8
----- -------- --------
Administrative expenses (166.3) (149.9)
----- -------- --------
Operating profit 3 29.7 18.9
----- -------- --------
Adjusted operating profit 37.2 29.0
----- -------- --------
Amortisation of acquired intangibles 3 (4.4) (2.4)
----- -------- --------
Exceptional items 4 (3.1) (7.7)
----- -------- --------
Operating profit 29.7 18.9
----- -------- --------
Finance expense (2.7) (0.5)
----- -------- --------
Profit before tax 27.0 18.4
----- -------- --------
Tax charge (including an exceptional
credit of GBPnil; 2018: GBP2.1m) 5 (7.4) (3.6)
----- -------- --------
Profit for the year attributable to
equity holders of the Parent 19.6 14.8
----- -------- --------
Earnings per share (pence) 7
----- -------- --------
- Basic 21.6 17.2
----- -------- --------
- Diluted 21.1 16.9
----- -------- --------
(1) The Group initially adopted IFRS 16 at 1 January 2019, using
the modified retrospective approach. The 2018 results have not been
restated for the impact of IFRS 16 under this method of
transition.
Consolidated Statement of Other Comprehensive Income for the
Year Ended 31 December 2019
2019 2018(1)
GBPm GBPm
Profit for the year 19.6 14.8
------- --------
Other comprehensive (expense)/income:
Items that may be reclassified subsequently
to profit or loss
------- --------
Foreign exchange differences arising on the
translation of foreign operations (11.0) 5.0
------- --------
Foreign exchange differences arising on the
translation of foreign currency quasi equity
loans to foreign operations, net of tax 1.9 (0.1)
------- --------
Total other comprehensive (expense)/income (9.1) 4.9
------- --------
Total comprehensive income for the year attributable
to equity holders of the Parent Company 10.5 19.7
------- --------
(1) The Group initially adopted IFRS 16 at 1 January 2019, using
the modified retrospective approach. The 2018 results have not been
restated for the impact of IFRS 16 under this method of
transition.
Consolidated Statement of Financial Position at 31 December
2019
2019 2018(1)
Note GBPm GBPm
Non-current assets
----- -------- --------
Intangible assets 8 215.2 222.9
----- -------- --------
Property, plant and equipment 11.0 9.1
----- -------- --------
Right of use assets 29.5 -
----- -------- --------
Deferred tax assets 7.0 8.9
----- -------- --------
Non-current tax assets 3.1 -
----- -------- --------
Other receivables 2.6 2.4
----- -------- --------
Capitalised contract costs 0.6 0.8
----- -------- --------
269.0 244.1
----- -------- --------
Current assets
----- -------- --------
Trade and other receivables 101.6 108.3
----- -------- --------
Capitalised contract costs 2.1 1.9
----- -------- --------
Tax assets 4.3 6.6
----- -------- --------
Cash and cash equivalents 9 26.3 19.8
----- -------- --------
134.3 136.6
----- -------- --------
Total assets 403.3 380.7
----- -------- --------
Current liabilities
----- -------- --------
Trade and other payables (92.5) (105.1)
----- -------- --------
Lease liabilities (7.6) -
----- -------- --------
Current tax liabilities (6.8) (11.2)
----- -------- --------
Provisions (0.2) (0.7)
----- -------- --------
(107.1) (117.0)
----- -------- --------
Non-current liabilities
----- -------- --------
Trade and other payables (1.9) (0.7)
----- -------- --------
Lease liabilities (24.4) -
----- -------- --------
Borrowings - (5.4)
----- -------- --------
Deferred tax liabilities (8.0) (8.7)
----- -------- --------
Non-current tax liabilities (4.3) -
----- -------- --------
Provisions (5.1) (3.3)
----- -------- --------
(43.7) (18.1)
----- -------- --------
Total liabilities (150.8) (135.1)
----- -------- --------
Net assets 252.5 245.6
----- -------- --------
Represented by:
----- -------- --------
Share capital 0.9 0.9
----- -------- --------
Share premium 136.8 136.0
----- -------- --------
Retained earnings 94.5 79.3
----- -------- --------
Translation reserve 20.3 29.4
----- -------- --------
Total equity 252.5 245.6
----- -------- --------
(1) The Group initially adopted IFRS 16 at 1 January 2019, using
the modified retrospective approach. The 2018 results have not been
restated for the impact of IFRS 16 under this method of
transition.
Consolidated Statement of Changes in Equity for the Year Ended
31 December 2019
Share Share Retained Translation
capital premium earnings reserve Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2018 0.8 100.7 67.8 24.5 193.8
--------- --------- ---------- ------------ --------
Profit for the year - - 14.8 - 14.8
--------- --------- ---------- ------------ --------
Other comprehensive income - - - 4.9 4.9
--------- --------- ---------- ------------ --------
Total comprehensive income - - 14.8 4.9 19.7
--------- --------- ---------- ------------ --------
Arising on share issues 0.1 35.3 - - 35.4
--------- --------- ---------- ------------ --------
Share-based payments - - 1.9 - 1.9
--------- --------- ---------- ------------ --------
Share-based payments deferred
tax - - (0.1) - (0.1)
--------- --------- ---------- ------------ --------
Dividend paid - - (5.1) - (5.1)
--------- --------- ---------- ------------ --------
At 31 December 2018 0.9 136.0 79.3 29.4 245.6
--------- --------- ---------- ------------ --------
Effect of adoption of IFRS
16 Leases - - (0.4) - (0.4)
--------- --------- ---------- ------------ --------
At 1 January 2019 (adjusted) 0.9 136.0 78.9 29.4 245.2
--------- --------- ---------- ------------ --------
Profit for the year - - 19.6 - 19.6
--------- --------- ---------- ------------ --------
Other comprehensive expense - - - (9.1) (9.1)
--------- --------- ---------- ------------ --------
Total comprehensive income/(expense) - - 19.6 (9.1) 10.5
--------- --------- ---------- ------------ --------
Issue of shares - 0.8 - - 0.8
--------- --------- ---------- ------------ --------
Share-based payments expense - - 2.4 - 2.4
--------- --------- ---------- ------------ --------
Share-based payments deferred
tax - - (0.1) - (0.1)
--------- --------- ---------- ------------ --------
Dividends paid - - (6.3) - (6.3)
--------- --------- ---------- ------------ --------
At 31 December 2019 0.9 136.8 94.5 20.3 252.5
--------- --------- ---------- ------------ --------
The amounts above are all attributable to equity holders of the
Parent Company
Consolidated Statement of Cash Flows for the Year Ended 31
December 2019
2019 2018(1)
Note GBPm GBPm
Cash flow from operating activities
----- ------- --------
Profit for the year 19.6 14.8
----- ------- --------
Tax expense 7.4 3.6
----- ------- --------
Profit before tax 27.0 18.4
----- ------- --------
Adjustments for:
----- ------- --------
Depreciation of property, plant and
equipment 3.3 3.1
----- ------- --------
Depreciation of right-of-use assets 6.0 -
----- ------- --------
Amortisation of intangible assets 8 9.5 4.6
----- ------- --------
Share-based payments expense 2.4 1.9
----- ------- --------
Interest expense 2.7 0.5
----- ------- --------
Foreign exchange expense/(income) 0.9 (0.3)
----- ------- --------
Cash generated from operations before
changes in working capital and provisions 51.8 28.2
----- ------- --------
Decrease/(increase) trade and other
receivables 6.4 (8.2)
----- ------- --------
(Decrease)/increase in trade and other
payables (10.4) 18.8
----- ------- --------
Cash generated from continuing operations 47.8 38.8
----- ------- --------
Income taxes paid (7.1) (2.8)
----- ------- --------
Net cash flow from operating activities 40.7 36.0
----- ------- --------
Investing activities
----- ------- --------
Purchase of property, plant and equipment (5.6) (2.2)
----- ------- --------
Acquisition of subsidiaries, net of
cash acquired 1.3 (59.2)
----- ------- --------
Expenditure on intangible assets (10.1) (12.2)
----- ------- --------
Net cash flow from investing activities (14.4) (73.6)
----- ------- --------
Financing activities
----- ------- --------
Proceeds from issue of shares, net
of costs - 35.4
----- ------- --------
Proceeds from external borrowings 26.2 19.6
----- ------- --------
Repayment of external borrowings (31.4) (14.4)
----- ------- --------
Repayment of principal portion of lease
liabilities (7.0) -
----- ------- --------
Dividends paid 6 (6.3) (5.1)
----- ------- --------
Finance costs (0.7) (1.4)
----- ------- --------
Net cash flow from financing activities (19.2) 34.1
----- ------- --------
(Decrease)/increase in cash and cash
equivalents 7.1 (3.5)
----- ------- --------
Cash and cash equivalents at 1 January 19.8 22.7
----- ------- --------
Effect of exchange rate changes (0.6) 0.6
----- ------- --------
Cash and cash equivalents at 31 December 9 26.3 19.8
----- ------- --------
(1) The Group initially adopted IFRS 16 at 1 January 2019, using
the modified retrospective approach. The 2018 results have not been
restated for the impact of IFRS 16 under this method of
transition.
Notes to the Financial Statements for the Year Ended 31 December
2019
1 Basis of Accounting
Basis of preparation
The financial information set out above does not constitute the
Group's statutory accounts for the years ended 31 December 2019 or
2018 but is derived from those accounts. Statutory accounts for
2018 have been delivered to the registrar of companies, and those
for 2019 will be delivered in due course. The auditor has reported
on those accounts; their reports were (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.
The financial statements have been prepared on the going concern
basis.
At 31 December 2019, the Group had cash of GBP26.3m and no
borrowings. In addition, the Group has in place a five-year GBP120m
revolving credit facility (RCF), expiring on 19 July 2023, of which
GBP70m is committed. The agreement includes a GBP50m accordion
(uncommitted) facility. This facility is provided by HSBC and
Lloyds and is subject to covenants that, if breached, would result
in the facility becoming repayable on demand. In March 2020, the
Directors drew down a total of GBP63.0m of the Group's bank
facility to ensure continued liquidity in the face of any potential
banking crisis and potential unforeseen liquidity issues as a
result of COVID-19 (see note 10). As a result of the draw-down, the
Group's gross cash position at 13 April 2020 was GBP99m. The Group
has a resilient balance sheet position, with net assets of
GBP252.5m as at 31 December 2019, having made a profit for the year
of GBP19.6m and delivered net cash flows from operating activities
of GBP40.7m for the year then ended.
As referred to in the operational review, the business
continuity plans actioned by the Group to date have resulted in
operations continuing unaffected on a remote working basis but with
the possibility of a reduction in revenues in the current year as a
result of the uncertain macro-economic environment caused by the
COVID-19 pandemic. Subsequent to year end, revenues and pipeline
have continued along pre COVID-19 forecast levels such that the
trading in Q1 has been in line with expectations.
The Directors have prepared cash flow forecast scenarios for a
minimum period of twelve months that could arise if revenues were
to reduce compared to the expectations set at the year end. These
scenarios include a revenue decline of 20% for a period of six
months (which includes a three-month phased return), which the
Directors believe to be a severe but plausible scenario. All
revenue reduction modelling is accompanied by a multi-phased cost
reduction plan. The first phase of cost controls totalling GBP8.0m
is already in progress and includes a combination of actions
including prioritisation of insourcing to reduce linguistic
outsourcing costs, a deferral of the annual inflationary pay rise
across the Group, restriction on new hires and tight control of
discretionary spend. The global stay at home directive
automatically results in additional cost savings in respect of
travel and entertainment. Cash controls such as not recommending a
final dividend for 2019 have also been put in place.
In addition, the Directors have also prepared a further downside
scenario which assumes a 35% reduction in revenue for six months
followed by a phased return in Q4. In such a case, which the
Directors believe is highly unlikely, further cost reduction
actions, which are all in the control of the Directors, would be
instigated. These include further restrictions in freelance
translator costs, reduction in consultant costs, reduction in
variable compensation due to trading performance and further delay
of inflationary pay rises. The Directors have more extensive cost
cutting actions open to them, such as additional measures to reduce
salary costs and the use of government's support schemes (including
the furlough scheme), but do not believe at this time that these
would need to be implemented.
In the scenarios modelled, including the further downside
scenario where the liquidity headroom is not large, the forecasts
indicate that the Group will be able to operate within the amount
and terms of the available facilities, including when the Group
repays its RCF drawdown at the first optional repayment dates of
GBP30m in June 2020 and GBP33m in September 2020.
In conclusion, the Directors believe that the Group is
well-placed to manage its business risks and to counter a potential
drop in revenues by cost mitigation actions under their control.
After due consideration of trading performance to date, the results
of the stress-test scenarios and the Directors' view of the
likelihood of these occurring, the Directors continue to adopt the
going concern basis of accounting in preparing the financial
statements.
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 2018 except as set out
below.
IFRS 16
The Group has adopted IFRS 16 Leases (IFRS 16) with a date of
initial application of 1 January 2019. As a result, the Group has
changed its accounting policies and updated its internal processes
and controls relating to leases.
IFRS 16 supersedes IAS17 Leases, IFRIC 4 Determining whether an
Arrangement contains a Lease, SIC-15 Operating Leases - Incentives
and SIC-27 Evaluation the Substance of Transactions involving the
Legal Form of a Lease. The standard sets out the principles for the
recognition, measurement, presentation and disclosure of leases and
requires lessees to recognise most leases on the statement of
financial position.
Lessor accounting under IFRS 16 is substantially unchanged from
IAS 17. Lessors will continue to classify leases as either
operating or finance leases using similar principles as in IAS 17.
The Group has minimal leases where the Group is a lessor, primarily
in respect of immaterial subleases held by the Group.
The Group has applied IFRS 16 using the modified retrospective
method of adoption with the date of initial application of 1
January 2019. Under this method, the standard is applied
retrospectively with the cumulative effect of initially applying
the standard recognised at the date of initial application. The
Group elected to use the practical expedient available under IFRS
16 not to reassess whether a contract is, or contains a lease at 1
January 2019. Instead, the Group applied the standard only to
contracts that were previously identified as leases applying IAS 17
and IFRIC 4 respectively at the date of initial application.
Upon adoption of IFRS 16, the Group applied a single recognition
and measurement approach for all leases except the short-term
leases and leases of low-value assets.
In addition, on transition to IFRS 16, the Group has taken
advantage of the additional practical expedients and has:
- Used a single discount rate for a portfolio of leases with
reasonably similar characteristics;
- Relied on the previous assessments of where leases are onerous
immediately before the date of initial application;
- Applied the short-term leases exemptions to leases with lease
terms that end within 12 months of the date of initial
application;
- Excluded the initial direct costs from the measurement of the
right-of-use asset at the date of initial application where
applicable; and
- Used hindsight in determining where certain leases contain
options to extend or terminate the leases.
The effect of adoption of IFRS 16 as at 1 January 2019 is as
follows:
GBPm
Assets
------
Right-of-use assets 30.5
------
Property, plant and equipment (0.5)
------
Trade and other receivables (in respect
of rent payments) (0.6)
------
Deferred tax assets 0.5
------
Total assets 29.9
------
GBPm
Liabilities
------
Lease liabilities 32.5
------
Deferred tax liabilities -
------
Trade and other payables (in respect
of accrued rent and lease incentives) (2.2)
------
Total liabilities 30.3
------
Equity GBPm
Retained earnings (0.4)
------
2 Segment Information
For internal management reporting purposes, the operating
segments are determined by product and service groupings and
referred to as divisions. The Group's operating segments are:
- Language Services
- Language Technologies
- Content Technologies
Segment profits represent the profit earned by each segment
without allocation of central administration costs which are
presented as a separate line below segment profit. This is the
measure reported to the Chief Operating Decision Maker, the Chief
Executive Officer, and Senior Management Team for the purposes of
resource allocation and assessment of segment performance. Transfer
prices between segments are set on an arm's length basis in a
manner similar to transactions with third parties.
Depreciation Adjusted operating
2019 - GBPm Revenue and Amortisation profit
Language Services 262.1 3.9 28.5
-------- ------------------ -------------------
Language Technologies 53.6 0.4 10.2
-------- ------------------ -------------------
Content Technologies 60.6 0.1 16.1
-------- ------------------ -------------------
Segment total 376.3 4.4 54.8
-------- ------------------ -------------------
Central costs (17.6)
-------- ------------------ -------------------
Group adj. operating
profit 37.2
-------- ------------------ -------------------
Exceptional items (3.1)
-------- ------------------ -------------------
Amortisation on
acquired intangibles (4.4)
-------- ------------------ -------------------
Operating profit 29.7
-------- ------------------ -------------------
Finance costs (2.7)
-------- ------------------ -------------------
Profit before taxation 27.0
-------- ------------------ -------------------
Depreciation Adjusted operating
2018(1) - GBPm Revenue and Amortisation profit
Language Services 218.2 3.2 23.0
-------- ------------------ -------------------
Language Technologies 49.8 1.0 9.5
-------- ------------------ -------------------
Content Technologies 55.3 1.1 14.9
-------- ------------------ -------------------
Segment total 323.3 5.3 47.4
-------- ------------------ -------------------
Central costs (18.4)
-------- ------------------ -------------------
Group adj. operating
profit 29.0
-------- ------------------ -------------------
Exceptional items (7.7)
-------- ------------------ -------------------
Profit on disposal -
-------- ------------------ -------------------
Amortisation on
acquired intangibles (2.4)
-------- ------------------ -------------------
Operating profit 18.9
-------- ------------------ -------------------
Finance costs (0.5)
-------- ------------------ -------------------
Profit before taxation 18.4
-------- ------------------ -------------------
(1) The Group initially adopted IFRS 16 at 1 January 2019, using
the modified retrospective approach. The 2018 results have not been
restated for the impact of IFRS 16 under this method of
transition.
3 Profit on ordinary activities
Operating profit before tax is stated after
charging - GBPm 2019 2018(1)
Research and development expenditure 24.4 17.6
----- --------
Depreciation of property, plant and equipment 3.3 3.1
----- --------
Depreciation of right of use assets 6.0 -
----- --------
Amortisation of acquired intangible assets 4.4 2.4
----- --------
Amortisation of other intangible assets 5.1 2.2
----- --------
Lease rentals for plant and machinery 0.6 0.1
----- --------
Lease rentals for land and buildings(1) 3.4 8.3
----- --------
Net foreign currency differences 0.9 0.5
----- --------
Share-based payments expense 2.4 1.9
----- --------
(1) The Group initially adopted IFRS 16 at 1 January 2019, using
the modified retrospective approach. The 2018 results have not been
restated for the impact of IFRS 16 under this method of
transition.
4 Exceptional items
Accounting policy
Exceptional items are those items that in management's judgement
should be disclosed separately by virtue of their size, nature or
incidence, in order to provide a better understanding of the
underlying financial performance of the Group. In determining
whether an event or transaction is exceptional, management
considers qualitative as well as quantitative factors such as
frequency or predictability of occurrence.
2019 2019 2018
Pre Tax 2019 Pre 2018 2018
GBPm Tax impact Total Tax Tax impact Total
Restructuring costs 2.5 (0.6) 1.9 4.1 (1.0) 3.1
----- -------- ------- ----- ------------ -------
Acquisition-related costs 0.1 (0.1) - 2.8 (0.1) 2.7
----- -------- ------- ----- ------------ -------
Other exceptional items 0.5 (0.1) 0.4 0.8 - 0.8
----- -------- ------- ----- ------------ -------
Total exceptional 3.1 (0.8) 2.3 7.7 (1.1) 6.6
----- -------- ------- ----- ------------ -------
Restructuring costs
Restructuring costs relate to the costs of organisational change
associated with the Group's transformation programme. Normal
trading redundancy costs are charged to the income statement as
incurred. The benefits of these programmes are reflected within
operating profit.
Acquisition-related costs
Acquisition-related costs of GBP0.1m include acquisition-related
integration costs offset by the settlement of indemnity claims made
subsequent to the re-measurement period.
Other exceptional items
Other exceptional costs include a GBP0.6m (2018: GBP0.8m) tax
penalty and associated interest which is considered exceptional due
to its size and nature. The amount represents management's best
estimate of the tax penalties and interest that will arise in
connection with revisions to certain transactions that have
occurred in prior years.
5 Taxation
UK corporation tax for the year ended 31 December 2019 is
calculated at 19% (2018: 19%) of the estimated assessable profit
for the period.
GBPm 2019 2018
Current tax:
------ ------
UK corporation tax at 19.0% (2018: 19.0%) 1.3 1.5
------ ------
Overseas current tax charge/(credit) 3.9 (0.3)
------ ------
Adjustment in respect of previous years 1.0 -
------ ------
Total current tax charge 6.2 1.2
------ ------
Deferred tax:
------ ------
Origination and reversal of temporary differences 1.5 2.4
------ ------
Adjustments to estimated amounts arising in
prior periods (0.3) -
------ ------
Total deferred tax charge 1.2 2.4
------ ------
Total tax charge as per the income statement 7.4 3.6
------ ------
Tax in other comprehensive income (0.3) -
------ ------
Tax in equity - (0.1)
------ ------
Tax attributable to the Group 7.1 3.5
------ ------
In 2018, the Group finalised its last s382 calculation in
respect of prior US acquisitions. The completion of this exercise
together with other deferred tax adjustments gave rise to an
exceptional deferred tax credit of GBP2.1m. This is included within
the origination and reversal of temporary differences in the prior
year. The charge for the year can be reconciled to profit for the
year before taxation per the Consolidated Statement of Profit or
Loss as follows:
GBPm 2019 2018
Profit for the year before taxation 27.0 18.4
------ ------
Profit for the year before taxation multiplied
by the standard rate of corporation tax in
the UK of 19% (2018: 19%) 5.1 3.5
------ ------
Effects of:
------ ------
Expenses not deductible for tax purposes 0.6 1.3
------ ------
Adjustments in respect of previous years 0.7 -
------ ------
Recognition of previously unrecognised trading
losses/timing differences (0.3) (2.1)
------ ------
Utilisation of tax losses brought forward previously
not recognised (0.3) (0.4)
------ ------
Higher tax rates on overseas earnings 1.5 0.6
------ ------
Other movements 0.1 0.7
------ ------
Tax charge as per the income statement 7.4 3.6
------ ------
Effective tax rate 27% 20%
------ ------
6 Dividends
GBPm 2019 2018
Final ordinary dividend for the year ended
31 December 2018 was 7.0 pence per share (year
ended 31 December 2017: 6.2 pence per share) 6.3 5.1
----- -----
The Directors are not recommending a final dividend for the year
ending 31 December 2019 (2018: 7.0p).
7 Earnings per share
Diluted earnings per share is calculated by adjusting the basic
earnings per share for the effects of share options and awards
granted to employees. These are included in the calculation when
their effects are dilutive.
Adjusted earnings per share is a trend measure, which presents
the long-term profitability of the Group excluding the impact of
specific transactions that management considers affects the Group's
short-term profitability. The Group presents this measure to assist
investors in their understanding of trends. Adjusted operating
profit is the numerator used for this measure. The Group has
identified the following items to be excluded when arriving at
adjusted operating profit: amortisation of acquisition intangible
assets and exceptional items.
The following reflects the income and share data used in
calculating EPS:
2019 2018
GBPm GBPm
Profit for the year 19.6 14.8
----------- -----------
Exceptional items charged within operating
profit 3.1 7.7
----------- -----------
Amortisation on acquired intangibles 4.4 2.4
----------- -----------
Tax effect of the above (1.7) (1.6)
----------- -----------
Exceptional tax credit - (2.1)
----------- -----------
Adjusted profit for the year 25.4 21.2
----------- -----------
Number Number
----------- -----------
Weighted average number of ordinary shares 90,760,708 86,147,916
----------- -----------
Effects of dilution from share options 2,072,690 1,657,337
----------- -----------
Weighted average number of ordinary shares
adjusted for the effect of dilution 92,833,398 87,805,253
----------- -----------
Pence Pence
----------- -----------
Basic EPS 21.6 17.2
----------- -----------
Diluted EPS 21.1 16.9
----------- -----------
Adjusted basic EPS 28.1 24.7
----------- -----------
Adjusted diluted EPS 27.4 24.2
----------- -----------
8 Intangible assets
Customer Intellectual Capitalised
GBPm relationships property Goodwill R&D Software Total
Cost
--------------- ------------- --------- ------------ --------- --------
At 1 January 2018 16.6 59.2 208.0 2.5 7.1 293.4
--------------- ------------- --------- ------------ --------- --------
Additions - - - 7.6 4.6 12.2
--------------- ------------- --------- ------------ --------- --------
Disposals - - - - (0.4) (0.4)
--------------- ------------- --------- ------------ --------- --------
Acquired on business
combination 30.1 4.3 22.3 - - 56.7
--------------- ------------- --------- ------------ --------- --------
Effect of movements
in exchange rates 1.6 1.4 5.0 - - 8.0
--------------- ------------- --------- ------------ --------- --------
At 1 January 2019 48.3 64.9 235.3 10.1 11.3 369.9
--------------- ------------- --------- ------------ --------- --------
Additions - - - 7.5 2.4 9.9
--------------- ------------- --------- ------------ --------- --------
Remeasurement of goodwill - - (1.2) - - (1.2)
--------------- ------------- --------- ------------ --------- --------
Disposals - - (17.1) - - (17.1)
--------------- ------------- --------- ------------ --------- --------
Effect of movements
in exchange rates (1.5) (2.0) (5.9) - - (9.4)
--------------- ------------- --------- ------------ --------- --------
At 31 December 2019 46.8 62.9 211.1 17.6 13.7 352.1
--------------- ------------- --------- ------------ --------- --------
Amortisation:
--------------- ------------- --------- ------------ --------- --------
At 1 January 2018 (16.2) (58.4) (65.9) - - (140.5)
--------------- ------------- --------- ------------ --------- --------
Charge for the year (0.9) (1.5) - (1.1) (1.1) (4.6)
--------------- ------------- --------- ------------ --------- --------
Disposals - - - - 0.4 0.4
--------------- ------------- --------- ------------ --------- --------
Effect of movements
in exchange rates (1.4) (0.9) - - - (2.3)
--------------- ------------- --------- ------------ --------- --------
At 1 January 2019 (18.5) (60.8) (65.9) (1.1) (0.7) (147.0)
--------------- ------------- --------- ------------ --------- --------
Charge for the year (2.0) (2.4) - (3.9) (1.2) (9.5)
--------------- ------------- --------- ------------ --------- --------
Disposals - - 17.1 - - 17.1
--------------- ------------- --------- ------------ --------- --------
Effect of movements
in exchange rates 0.5 2.0 - - - 2.5
--------------- ------------- --------- ------------ --------- --------
At 31 December 2019 (20.0) (61.2) (48.8) (5.0) (1.9) (136.9)
--------------- ------------- --------- ------------ --------- --------
Net book value
--------------- ------------- --------- ------------ --------- --------
At 31 December 2019 26.8 1.7 162.3 12.6 11.8 215.2
--------------- ------------- --------- ------------ --------- --------
At 31 December 2018 29.8 4.1 169.4 9.0 10.6 222.9
--------------- ------------- --------- ------------ --------- --------
9 Cash and borrowings
GBPm 2019 2018
Cash at bank 26.3 19.8
----- -----
The fair value of cash and cash equivalents is GBP26.3m (2018:
GBP19.8m). Restricted cash at 31 December 2019 was GBP0.4m (2018:
GBP0.3m).
Cash at bank earns interest at floating rates based on daily
bank deposit rates. Short-term deposits are made for varying
periods of between one day and three months, depending on the
immediate cash requirements of the Group, and earn interest at the
respective short-term deposit rates.
Net cash - GBPm 2019 2018
Cash and cash equivalents 26.3 19.8
----- ------
Borrowings - (5.4)
----- ------
Net cash 26.3 14.4
----- ------
Borrowings
The Group has in place a five-year GBP120m revolving credit
facility (RCF), expiring on 19 July 2023, of which GBP70m is
committed. The agreement includes a GBP50m accordion (uncommitted)
facility. This facility is provided by HSBC and Lloyds and is
subject to covenants that, if breached, would result in the
facility becoming repayable on demand. At 31 December 2019, GBPnil
was drawn on the facility (2018: GBP5.4m). In March 2020, the
Directors drew down a total of GBP63.0m of the Group's bank
facility to ensure continued liquidity in the face of any potential
banking crisis and potential unforeseen liquidity issues as a
result of COVID-19.
Drawdowns under the GBP70m committed revolving credit facility
are repayable in one, three and six month instalments and amounts
can be redrawn at any time as long as covenant and other conditions
are met. Accordingly, drawdowns under this facility have been
categorised as non-current. The loan bears interest at LIBOR+
margin, the margin varying between 1.15% and 2.15% depending on the
ratio of the Group's total net debt to its adjusted earnings before
interest, tax, depreciation and amortisation. Covenants on the RCF
are limited to a net debt to EBITDA ratio of 3:1 and a minimum of
4:1 on EBITDA to interest.
10 Events after the Statement of Financial Position date
In early 2020, the existence of a new coronavirus (COVID-19) was
confirmed, which has since spread across a significant number of
countries, leading to disruption to businesses and economic
activity that has been reflected in recent fluctuations in global
stock markets. The Group considers the emergence and spread of
COVID-19 to be a non-adjusting post balance sheet event and given
the inherent uncertainties, it is not practicable at this time to
determine the exact impact of COVID-19 on the Group or to provide a
quantitative estimate of the impact.
As a result of COVID-19, the Group drew down GBP63.0m on its
revolving credit facility to manage liquidity.
11 Alternative Performance Measures (APMs)
The Group presents various APMs as the Directors believe that
these are useful for the users of the financial statements in
helping to provide a balanced view of, and relevant information on,
the Group's financial performance.
Measure/description Why SDL uses it
------------------------------------------------------------- --------------------------------------------
Adjusted
Adjusted measures are adjusted Adjusted measures allow management
to exclude items which would distort and investors to compare performance
the understanding of the performance without exceptional items or
for the year or comparability non-operational items.
between periods:
* Amortisation of acquired intangible assets
* Exceptional items that in management's judgement
should be disclosed separately (see note 4) by virtue
of their size, nature or incidence
------------------------------------------------------------- --------------------------------------------
Constant currency
Prior period underlying measures, Constant currency measures allow
including revenue, are retranslated management and investors to compare
at the current year exchange rates performance without the potentially
to neutralise the effect of currency distorting effects of foreign
fluctuations. exchange movements.
------------------------------------------------------------- --------------------------------------------
Pro forma
In addition to the adjustments Pro forma measures allow management
made for adjusted measures, pro and investors to understand the
forma measures assume a full year like-for-like revenue and current
of results from acquired businesses period margin performance of
during the period. the continuing business.
------------------------------------------------------------- --------------------------------------------
Adjusted operating profit
Defined as operating profit excluding As a measure of operating profit
exceptional items and amortisation excluding major non-cash items.
of acquired intangibles. A reconciliation
of adjusted profit to operating
profit is provided in the consolidated
statement of profit or loss.
------------------------------------------------------------- --------------------------------------------
Adjusted EPS
The adjusted EPS is EPS adjusted The adjusted EPS measure allows
for the impact of disposals by management and investors to compare
excluding current and prior period performance without the distorting
disposals, exceptional items, effects arising from significant
the impact of amortisation on acquisitions, disposals and the
acquired intangibles and the impact impact of exceptional tax charges
of exceptional tax charges or or credits.
credits. A reconciliation of adjusted
EPS to EPS is provided in note
7.
------------------------------------------------------------- --------------------------------------------
Annual Recurring Contract Value
(ARCV) As a measure of new recurring
Annual Recurring Contract Value bookings that can be compared
(ARCV) is the amount of revenue across different contract durations
recognised in the last month of (monthly, annual, multi-year)
the reporting period annualised and types (maintenance and subscription).
and generated from technology-
related subscription contracts
(SaaS, hosting and support and
maintenance) and term contracts.
------------------------------------------------------------- --------------------------------------------
Language Services Repeat Revenue
Rate (RRR) As a measure of the level of
Current year Language Services repeat business with existing
revenue earned from prior year customers.
customers as a percentage of the
prior year Language Services revenue;
the difference between this measure
and total revenue for Language
Services is revenue from new customers.
------------------------------------------------------------- --------------------------------------------
END
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR IJMBTMTBBTPM
(END) Dow Jones Newswires
April 14, 2020 02:00 ET (06:00 GMT)
Sdl (LSE:SDL)
Historical Stock Chart
From Jun 2024 to Jul 2024
Sdl (LSE:SDL)
Historical Stock Chart
From Jul 2023 to Jul 2024
