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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Sdl Plc | LSE:SDL | London | Ordinary Share | GB0009376368 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 660.00 | 668.00 | 670.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSDL
RNS Number : 9711G
SDL PLC
10 March 2015
10 March 2015
SDL PLC
Preliminary results for the year ended 31 December 2014
Technology bookings up 14% - SDL now well placed for accelerating revenue growth
SDL plc ("SDL", "the Group" or the "Company"), a leader in Customer Experience Management solutions, announces its audited results for the year ended 31 December 2014.
Hot Features
Premium
2014 2013
GBPm GBPm
Income Statement:
Revenue 260.4 266.1
Profit before tax, amortisation of
intangible assets and one-off costs 16.5 8.2
Profit/(loss) before tax 9.4 (24.4)
Earnings per ordinary share - basic
(pence) 8.03 -34.78
Adjusted* earnings per ordinary share
- basic (pence) 15.10 2.57
*before amortisation and one-off costs
Highlights
-- Group revenues of GBP260.4m, up 3% at constant currency, a marginal fall in reported revenues of 2%
-- Group Profit before One-Off costs, Amortisation and Tax ("PBTA") GBP16.5m, up 103% at constant currency and 101% on a reported basis
-- Language Services at constant currency: revenue +2%, PBTA GBP26.3m (2013: GBP23.5m)
-- Technology at constant currency: Revenue +3%, loss reduced from GBP15.4m to GBP9.8m
-- Technology bookings up 14% at constant currency
-- Technology Annual Recurring Revenue ("ARR") up 14% at constant currency
-- Progress demonstrated by continued new Technology business wins with House of Fraser, Schneider Electric, TomTom, ASOS and Bose
-- Dividend of 2.5p per share to be proposed at the Annual General Meeting
Mark Lancaster, Chief Executive Officer, commented:
"2014 has been a year of very significant progress for SDL. The operational transformation is progressing well and whilst there is still investment to do, I believe that we have a solid foundation to deliver long-term growth and profit.
Our best of breed integrated technology combined with our brightest talent will ensure that we execute against our goals, providing the impetus for our future success. I believe that we are now well positioned to capitalise on the opportunities presented to us as we seek to deliver differentiated solutions globally to our large customer base within this competitive market."
Outlook
We expect the digital Customer Experience Management market to continue to evolve rapidly over the next three years, as consumers demand better customer engagement across a broad spectrum of online devices and increasingly smartphones. SDL's investments into the technologies that will ultimately deliver a platform comprising web, social, big data analytics, ecommerce optimisation and language position the company well to be a leader in this market. We expect this new Customer Experience market to grow by more than 15% per year as we move into 2016.
We enter a new year with a solid pipeline of opportunities and are well placed for accelerating revenue growth. I am more confident than I have ever been in the products and services we offer and the structure, process and people we have at SDL.
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 / Emma Appleton
About SDL
SDL (LSE: SDL) is the leader in global customer experience. With a completely integrated cloud solution for content management, analytics, language and documentation, SDL solves the complexity of managing your brand's digital footprint as it grows across multiple languages, cultures, websites, devices and channels.
Seventy-nine of the top 100 global companies trust SDL to help them create authentic, in-context customer experiences that drive demand and loyalty. SDL brings your brand to the world, and the world to your brand. Learn more at SDL.com. Follow SDL on Facebook and Twitter.
Chairman's Statement
Summary:
-- Solid progress - adjusted* earnings per share of 15.10p (2013: 2.57p); (*before amortisation and one-off costs).
-- Dividend reinstated - 2.5p per share to be paid -- Board development effectively managed
SDL has made good progress in 2014 and has benefitted from our restructuring and commitment to long term investment in enterprise level sales and marketing. As a result, we have seen our adjusted earnings per share increase from 2.57 pence to 15.10 pence.
SDL continues to address the rapidly evolving market conditions well. These market conditions have provided an opportunity for the Board to review group strategy and think more broadly about how best to harness our competitive positioning, assets and expertise.
Under Mark's leadership, the executive team has continued to make progress in 2014 to complete the operational restructure of the business to align with the significant market opportunity whilst laying the foundations for sustainable future growth.
I am pleased to lead a talented Board with the combination of expertise and experience to drive the Group forward. Whilst we have a clear strategic path, as Chairman I am responsible for continually developing and evolving the Board to make it relevant and appropriately experienced in the light of both our short-term and longer-term business strategy. To that end we were delighted to welcome Alan McWalter and Glenn Collinson as non-executive directors during 2014. They have extensive and highly relevant experience and bring a fresh and new perspective to the Board and its Committees.
Alan McWalter joined SDL as the Senior Independent Director on 1 March 2014. He sits on the Audit and Remuneration Committees and is Chairman of the Nomination Committee. Glenn Collinson joined SDL as a Non-executive Director and Chairman of the Remuneration Committee on 1 June 2014. He also sits on the Audit and Nomination Committees. We are already benefiting from their knowledge and experience and we look forward to their contributions to the next stage in the development of the Group.
It is SDL's people, who, more than any other factor, make the company special; supporting their development is one of the key investments we can make in the future of the business. Talent identification and development has been a key priority of our human resources strategy. Work is underway to help the development of our people with increased emphasis on growth areas of our business. Consistent with our stated policy to progress dividends to shareholders in line with our earnings, the Board is recommending a final dividend to the Annual General Meeting of 2.5 pence per share.
Overall 2014 has seen good progress in SDL's return to profitable growth. On behalf of our stakeholders I would like to thank all our people for their commitment, passion and hard work.
SDL has continued to make good progress in building a sustainable business that delivers value to its shareholders. The long term external market drivers are firmly in place and the Board is confident that these, together with our robust strategy, should support the continued growth of SDL over the years ahead.
David Clayton
Chairman
Chief Executive's statement
2014 has been a year of very significant progress for SDL. Back in January 2013, we began a programme of significant investment and operational realignment to better position the company to address its market opportunities. As at the end of 2014 we have seen not just seen significant recovery, but excellent new bookings growth in our technology business and solid contribution in our language services business, enhancing the margins of both businesses and delivering good cash conversion for the Group at this relatively early point in the turnaround of the financial performance of the Group.
Revenues were GBP260.4m up 3% at constant currency (2013: GBP266.1m at reported currency). Profit before taxation and amortisation of intangible assets ("PBTA") was GBP16.5m (2013: GBP8.2m). During the year, net cash in the business increased by GBP14.9m. Net cash at the end of the year was GBP13.1m (2013: net debt of GBP1.8m).
Technology segment new license bookings had a year of excellent growth, up 14% at constant currency. This segment delivered gross margins of 71.0% (2013: 71.4%) and PBTA margins of -8.6% (2013: -14.0%) at constant currency.
Language Services continues to deliver revenue growth and increased margins with significant progress in gross and operating margins. This segment delivered gross margins of 45.5% (2013: 42.4%) and PBTA of 17.9% (2013: 16.3%) at constant currency.
We have spent the last two years creating the right structure, systems and processes to enable SDL to deliver in the new digital world. This involved tremendous upheaval and disruption essential to achieve our long term goal of exceeding the levels of growth and profitability we achieved in the prior 10 years. There is still investment to do and we will continue to make these investments to deliver long-term growth and profit.
During the year we continued to measure the progress of the business against certain management Key Performance Indicators:
Summary KPIs
2014
------------------------------------- ---------
Total Technology bookings* +14%
------------------------------------- ---------
New logo software bookings* +35%
------------------------------------- ---------
Annual Recurring Revenue* +14%
------------------------------------- ---------
Net cash GBP13.1m
------------------------------------- ---------
Language Services gross margin* 45.5%
------------------------------------- ---------
Language Services operating margin* 17.9%
------------------------------------- ---------
* at constant currency
------------------------------------- ---------
Our transformation programme has set the foundations and structure to enable us to embrace the market opportunity and deliver solutions for Customer Experience Management. We have converged our Technology portfolio under the Customer Experience Cloud (CXC) umbrella and brought customer care across Technology and our Language Services business closer together so that we provide the very best service possible. Our customers and the market have reacted very positively to these changes and we have some impressive brand names taking multiple CXC solutions such as House of Fraser, Schneider Electric, TomTom, Philips Healthcare and Akamai Technologies.
We now have a solid foundation with best of breed integrated technology and, we have recruited the best and the brightest talent across sales, pre-sales and account management to ensure we execute against our goals and provide the impetus for our future success. We also have a cohesive partner ecosystem around us, which is key to our success.
Market and Strategy
The explosion of digital content and channels, and the way people gain knowledge and make decisions is forcing companies to change significantly and language is increasingly being recognised as a critical strategic component of Customer Experience.
Organisations are faced with the increased challenge of meeting growing consumer expectations and delivering a superior experience. SDL CXC significantly enhances marketers' ability to meet their customers' needs and deliver a product and brand experience that resonates with them. Marketers are provided with all the information required on who to target and how to personalise the experience for the customer, while ensuring the delivery of relevant and timely information to the right device, in the customers' own language, faster than any other vendor today.
We released Customer Experience Cloud 2.0 that focuses on four key pillars: Digital Experience, Knowledge Centre, Customer Analytics and Language which together meet the needs of today's global organisations. With these enhanced capabilities, organisations can gain more insight into customer behaviour and preferences to guide customer experience strategies, act on opportunities in real time and deliver relevant experiences in the language of the customer. This release has major improvements from our 1.0 release in integrated user experience, cloud capabilities, Customer Journey Analytics and ecommerce.
Innovation - the future
In the next five years, as the internet babies become the mainstream, all businesses will need to deliver personalised experiences to global markets. Our research and development programmes are delivering and will continue to deliver technology and services that enhance real-time business decisions by making sense of Big Data (social and structured), that covers their customers' journeys from product research, purchase and post-purchase customer service, all on an advanced Cloud-based platform. So, our future is: real time decisioning; Language Cloud technology; post purchase CX; and moving all our technology to SaaS - self-service, self-starter.
Outlook
We expect the digital Customer Experience Management market to continue to evolve rapidly over the next three years, as consumers demand better customer engagement across a broad spectrum of online devices and increasingly smartphones. SDL's investments into the technologies that will ultimately deliver a platform comprising web, social, big data analytics, ecommerce optimisation and language position the company well to be a leader in this market. We expect this new Customer Experience market to grow by more than 15% per year as we move into 2016.
The operational transformation is progressing well. Whilst there is ongoing investment, we believe that we are now well positioned to deliver differentiated solutions globally to our large customer base within this competitive market.
We enter a new year with a solid pipeline of opportunities and are well placed for accelerating revenue growth. I am more confident than I have ever been in the products and services we offer and the structure, process and people we have at SDL.
Financial Review
Summary Performance
Revenues for 2014 were GBP260.4 million (2013: GBP266.1 million). Profit before taxation, amortisation of intangible assets and one off costs ("PBTA") was GBP16.5 million (2013: GBP8.2 million). Gross cash in the business at year-end was GBP22.1 million (2013:GBP18.2 million) and net cash after borrowings was GBP13.1 million (2013: net debt GBP1.8 million).
Organic growth of 3% was offset by adverse foreign currency effects of 5%. Headline revenue decreased by 2%. Language Services and Technology segments have grown by 2% and 3% respectively on a constant currency basis. Geographically, Europe increased by 10%, the decline in Asia was 4% and North America was 7%. on a constant currency basis.
Cash generated from operations was GBP22.2 million (2013: GBP15.8 million). Cash generation in the year 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 to GBP2.4 million following the prior year investment in SaaS Cloud infrastructure (2013: GBP6.1 million). Tax paid was GBP3.9 million (2013: GBP10.3 million).
The business continues to benefit from a diverse mix of regions, industry verticals and customers, limiting the Group's exposure to adverse economic conditions in certain countries and sectors. Customer concentration is in line with prior year with the 20 largest customers contributing 26% (2013: 25%) of revenue in 2014. No single customer contributes more than 4% of group revenues.
Performance by Segment
Following the 2013 reorganisation, the Group has revisited its cost allocation methodologies during the year to better represent how shared costs and services are consumed by each segment. In accordance with IFRS 8, the operating segments for the comparative period have been restated.
Again, following the 2013 reorganisation, the Group now has two reportable segments:
Language Services (contributing GBP146.8 million or 56% of total revenue and GBP26.3 million of PBTA) (2013: contributing GBP150.5 million or 56% of total revenue and GBP24.6 million of PBTA).
Segment revenue reduced by 2% in the year, comprising an underlying increase of 2% at constant currency and a 4% adverse foreign exchange impact. Revenue growth has been strongest in Europe which grew at 5% on a constant currency basis.
The strong second half margin performance seen in 2013 continued into 2014. Gross margins have recovered to 45.5% 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 17.9% (2013: 16.3%) on a constant currency basis.
New client wins include Rentokil, Intel and China Southern Airlines.
Technology (contributing GBP113.6 million or 44% of revenue and losses of GBP9.8 million PBTA) (2013: contributing GBP115.6 million or 44% of revenue and losses of GBP16.4 million PBTA).
Segment revenue reduced by 2% in the period, comprising an underlying increase of 3% at constant currency offset by a 5% 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 were GBP99.3 million for the year, an improvement of 14% on the prior year (GBP87.0 million) at constant currency;
-- At the end of the year, Annual Recurring Revenue (ARR) from SaaS and perpetual licence support and maintenance contracts was GBP71.0m, up 14% (2013: GBP62.5 million) at constant currency.
New client wins include ASOS, Bose, Specsavers, Lloyd's Register and Miami Heat.
Gross Margin
The Group's gross margin was 57%, an increase from 55% in 2013.
Administrative Expenses
Administrative costs excluding intangibles amortisation and one-off costs reduced in 2014 to GBP130.7 million (2013: GBP137.4 million).
Research and development costs of GBP28.1 million (2013: GBP28.8m) are included in administrative expenses. During the year, the Group issued 57 product releases with greater functionality being deployed. We have adopted a continuous release programme for our SaaS products which improves our customers' experience by delivering releases quicker and more effectively than in prior years.
Development costs have been reviewed and the Board remains of the opinion that capitalisation criteria under International Accounting Standard (IAS) 38 are not met. Consequently no development costs are capitalised on the balance sheet.
Headcount was 3,349 at the end of 2014, compared to 3,205 at the end of 2013. Employee related costs remain the most significant component of Group costs, amounting to 66% of Group overheads (2013: 67%) excluding amortisation of intangibles.
Intangible assets ascribed to certain of the Group's software and customer relationships arising from acquisitions are amortised over periods of between 5 and 10 years and the carrying value is formally reviewed on an annual basis to assess whether there are indicators of impairment. The intangible asset amortisation charge in 2014 was GBP7.1 million (2013: GBP7.5 million).
Intangible assets and goodwill were allocated to two Cash Generating Units ("CGU") namely Language Services and Technology. The 2014 impairment review resulted in no impairment (2013: impairment of GBP20.4 million in the Content and Analytic Technologies segment).
Earnings Per Share
Basic earnings per share when adjusted for one off costs amortisation of intangibles ("adjusted EPS") increased by 488% to 15.1 pence. Basic earnings per share was 8.03 pence (2013: loss, 34.78 pence).
Financing Costs
Interest costs in 2014 were GBP0.4 million (2013: GBP0.5m). At the start of the year, drawn borrowings were GBP20.0 million. During 2014, we repaid GBP11.0 million and drawn borrowings were GBP9.0 million at the end of the year.
The net cash was strengthened to GBP13.1m at year end (2013: net debt of GBP1.8m).
Cash flow
The Group generated GBP22.2m from operations during the year (2013: GBP15.8m). This cash inflow was net of GBP3.0m of exceptional cash outflows arising from the 2013 Group restructuring, increased deferred income balances and accruals, and GBP0.6m to fund the cash settlement of retention share plans. Pre-tax cash conversion, measured after capital expenditure, rose to 93% from 72% in the prior year.
Surplus cash generated after deducting net income tax paid of GBP3.9m (2013: GBP10.3m) and investing activities of GBP2.6m and funding activities has been used to repay most of the Group's bank borrowings. GBP11m was repaid in 2014 and further GBP6m in January 2015.
Borrowing Facilities
The group's current borrowing facility is a revolving credit facility of GBP30 million expiring in September 2015. GBP9.0 million of this facility was drawn at the year-end and has been substantially repaid in early 2015.
Pricing of this GBP30 million borrowing facility is between 1.3% and 1.9% above LIBOR dependent upon the ratio of the Group's gross borrowings to its earnings before interest, tax, depreciation and amortisation. Under the credit facility agreement, SDL is subject to certain financial covenants which are required to be tested quarterly. These covenants relate to EBITA: Borrowing Costs; Net Cash Flow: Debt Service Liability and Gross Borrowings: EBITDA. The Board remains of the opinion that operating with low levels of debt is appropriate in the current economic environment, whilst maintaining sufficient debt facility headroom to finance normal investment activities.
Derivatives and other Financial Instruments
The Group has cash and short-term deposits of varying durations to fund its working capital needs and other financial assets and liabilities such as trade receivables and trade payables arising directly from its operations. The Group's policy is that no active trading in financial instruments will be undertaken within the operating units and all decisions on use of financial instruments will be taken at Group level under the direction of the Chief Financial Officer.
Taxation
SDL is a global business and, as such, the Group's effective tax rate is heavily influenced by the territorial mix of where operating profits are earned together with management judgement of the extent to which the Group's tax losses are likely to be utilised with reasonable certainty. A detailed analysis of the taxation charge is included in note 4 to the accounts.
The tax charge for the year is GBP2.8 million (2013: GBP3.5 million). This charge includes an increased recognition of deferred tax assets
Trados litigation update
As reported previously, the group has ongoing litigation related to the Trados acquisition.
The Group has taken part in a mediation process during the year and a settlement in principle has been agreed subject to legal completion and Court ratification.
Dividend
A final dividend for the year ended 31 December 2014 of 2.5 pence per share will be proposed at the Annual General Meeting.
SDL plc
Consolidated INCOME STATEMENT
for the year ended 31 December 2014
Notes 2014 2013
GBPm GBPm
Sale of goods 50.6 49.6
Rendering of services 209.8 216.5
REVENUE 2 260.4 266.1
Cost of sales (112.9) (120.1)
GROSS PROFIT 147.5 146.0
Administrative expenses 3 (137.8) (170.0)
-------- --------
OPERATING PROFIT/(LOSS) 9.7 (24.0)
Operating profit before TAX,
AMORTISATION AND ONE-OFF COSTS 16.8 8.6
Amortisation of intangible assets (7.1) (7.5)
One-off costs 3 - (25.1)
OPERATING PROFIT/(LOSS) 9.7 (24.0)
----------------------------------------- ------ -------- --------
Finance income 0.1 0.1
Finance costs (0.4) (0.5)
PROFIT/(loss) BEFORE TAX 9.4 (24.4)
profit before TAX, AMORTISATION
AND one-off COSTS 16.5 8.2
Amortisation of intangible assets (7.1) (7.5)
One-off costs 3 - (25.1)
PROFIT/LOSS BEFORE TAX 9.4 (24.4)
----------------------------------------- ------ -------- --------
Tax expense 4 (2.8) (3.5)
PROFIT/(LOSS) FOR THE YEAR ATTRIBUTABLE
TO EQUITY HOLDERS OF THE PARENT 6.6 (27.9)
======== ========
Earnings per ordinary share
- basic (pence) 5 8.03 (34.78)
Earnings per ordinary share
- diluted (pence) 5 7.97 (34.78)
======== ========
SDL plc
Consolidated STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
Notes 2014 2013
GBPm GBPm
Profit/(Loss) for the period 6.6 (27.9)
------ -------
Currency translation differences
on foreign operations (5.3) (0.1)
Currency translation differences
on foreign currency equity loans
to foreign subsidiaries 4.1 (0.3)
Income tax charge on currency translation
differences on foreign currency equity
loans to foreign subsidiaries 4 (1.1) (0.1)
OTHER COMPREHENSIVE INCOME (2.3) (0.5)
------ -------
TOTAL COMPREHENSIVE INCOME 4.3 (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
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2014
Notes 2014 2013
GBPm GBPm
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 7.4 9.6
Intangible assets 6 202.6 209.0
Deferred tax asset 5.3 3.7
Rent deposits 1.7 1.6
-------- --------
217.0 223.9
CURRENT ASSETS
Trade and other receivables 71.7 70.9
Cash and cash equivalents 7 22.1 18.2
-------- --------
93.8 89.1
TOTAL ASSETS 310.8 313.0
-------- --------
CURRENT LIABILITIES
Trade and other payables (84.0) (79.9)
Loans and overdraft (9.0) (20.0)
Current tax liabilities (6.7) (4.8)
Provisions (2.8) (2.3)
-------- --------
(102.5) (107.0)
NON CURRENT LIABILITIES
Other payables (1.3) (2.6)
Deferred tax liability (4.4) (6.0)
Provisions (0.5) (0.9)
-------- --------
(6.2) (9.5)
TOTAL LIABILITIES (108.7) (116.5)
-------- --------
NET ASSETS 202.1 196.5
======== ========
EQUITY
Share capital 0.8 0.8
Share premium account 97.9 97.4
Retained earnings 90.9 83.5
Foreign exchange differences 12.5 14.8
-------- --------
TOTAL EQUITY 202.1 196.5
======== ========
SDL plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2014
Share Retained Foreign
Share Premium Earnings Exchange
Capital Account Differences Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2013 0.8 96.8 114.9 15.3 227.8
Profit for the period - - (27.9) - (27.9)
Other comprehensive
income - - - (0.5) (0.5)
---------- --------- ---------- ------------- --------
Total comprehensive
income - - (27.9) (0.5) (28.4)
Deferred income taxation
on share based payments* - - 0.2 - 0.2
Arising on share issues* - 0.6 - 0.6
Dividend paid* - - (4.9) - (4.9)
Share based payments* - - 1.2 - 1.2
---------- --------- ---------- ------------- --------
At 31 December 2013 0.8 97.4 83.5 14.8 196.5
---------- --------- ---------- ------------- --------
Share Retained Foreign
Share Premium Earnings Exchange
Capital Account Differences Total
GBPm GBPm GBPm GBPm GBPm
At 1 January 2014 0.8 97.4 83.5 14.8 196.5
Loss for the period - - 6.6 - 6.6
Other comprehensive
income - - - (2.3) (2.3)
---------- --------- ---------- ------------- --------
Total comprehensive
income - - 6.6 (2.3) 4.3
Deferred income taxation - - - - -
on share based payments*
Arising on share issues* - 0.5 - - 0.5
Share based payments* - - 0.8 - 0.8
---------- --------- ---------- ------------- --------
At 31 December 2014 0.8 97.9 90.9 12.5 202.1
---------- --------- ---------- ------------- --------
*These amounts relate to transactions with owners of the Company recognised directly in equity. The amounts above are all attributable to equity holders of the parent company
SDL plc
consolidated STATEMENT OF CASH FLOWS
for the year ended 31 December 2014
Notes 2014 2013
GBPm GBPm
PROFIT/(LOSS) BEFORE TAX 9.4 (24.4)
Depreciation of property, plant
and equipment 4.7 5.1
Amortisation of intangible assets 6 7.1 7.5
Impairment losses on intangible
assets - 20.4
Finance income (0.1) (0.1)
Finance costs 0.4 0.5
Share based payments 0.8 1.2
Increase in trade and other receivables (2.0) (2.4)
Increase in trade and other payables 1.9 8.0
CASH GENERATED FROM OPERATIONS 22.2 15.8
Income tax paid (3.9) (10.3)
------- -------
NET CASH FLOWS FROM OPERATING ACTIVITIES 18.3 5.5
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire property, plant
& equipment (2.4) (6.1)
Receipts from sale of property,
plant & equipment - 0.1
Payments to acquire subsidiaries (0.3) (1.4)
Net cash acquired with subsidiaries - 0.2
Interest received 0.1 0.1
------- -------
NET CASH FLOWS FROM INVESTING ACTIVITIES (2.6) (7.1)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issue of ordinary
share capital 0.4 0.2
Proceeds from borrowings - 20.0
Repayment of borrowings (11.0) (22.2)
Dividend paid - (4.9)
Repayment of capital leases (0.3) (0.4)
Interest paid (0.4) (0.5)
NET CASH FLOWS FROM FINANCING ACTIVITIES (11.3) (7.8)
INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 4.4 (9.4)
======= =======
MOVEMENT IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the
start of year 18.2 28.5
Increase/(decrease) in cash and
cash equivalents 4.4 (9.4)
Effect of exchange rates on cash
and cash equivalents (0.5) (0.9)
CASH AND CASH EQUIVALENTS AT END
OF YEAR 7 22.1 18.2
======= =======
SDL plc
notes to the financial INFORMATION
1. BASIS OF ACCOUNTING
Basis of preparation
The financial information set out above does not constitute the Group's statutory financial statements for the years ended 31 December 2014 or 2013. Statutory consolidated financial statements for the Group for the year ended 31 December 2013, prepared in accordance with adopted IFRS, have been delivered to the Registrar of Companies and those for 2014 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of any emphasis without qualifying their opinion and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
The financial information for the year ended 31 December 2014 has been prepared by the directors based upon the results and position that are reflected in the consolidated financial statements of the Group.
The consolidated financial statements of SDL plc and its subsidiaries have been prepared in accordance with International Financial Reporting Standards as adopted by the EU as relevant to the financial statements of SDL plc.
Significant accounting policies
The accounting policies adopted in the preparation of the condensed consolidated financial information are consistent with those followed in preparation of the Group's annual financial statements for the year ended 31 December 2013.
In line with UK Corporate Governance Code requirements, the Directors have made enquiries concerning the potential of the business to continue as a going concern. Enquiries included a review of performance in 2014, 2015 annual plans, a review of working capital including the liquidity position, financial covenant compliance and a review of current cash levels. At 31 December 2014, the Company had drawn GBP9.0 million of its GBP30.0 million facility with Royal Bank of Scotland. GBP6.0 million has been repaid in early 2015 and current forecasts show no funding requirement beyond September 2015.
As a result, they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Given this expectation they have continued to adopt the going concern basis in preparing the financial statements.
2. SEGMENT INFORMATION
The Group operates in the Customer Experience Management industry. For management purposes, the Group is organised into business units based on the nature of their products and services. Following the completion of the Group's 2013 reorganisation during this year, 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, campaign management, social media monitoring and marketing analytic technologies together with associated consultancy and other services.
The Chief Operating Decision Maker monitors the results of the operating segments separately for the purpose of making decisions about resource allocation and performance assessment prior to charges for tax and amortisation. Following the reorganisation, the Group has also revisited its cost allocation methodologies during the year to better represent how shared costs and services are consumed by each segment.
In accordance with IFRS 8, the operating segments for the comparative period have been restated.
notes to the financial INFORMATION (Cont.)
Year ended 31 December 2014
External Total Depreciation Segment profit
Revenue Revenue before taxation
and amortisation
GBPm GBPm GBPm GBPm
Language Services 146.8 146.8 1.6 26.3
Technology 113.6 113.6 3.1 (9.8)
--------- --------- ------------- ------------------
Total 260.4 260.4 4.7 16.5
--------- --------- -------------
Amortisation (7.1)
------------------
Profit before taxation 9.4
==================
Year ended 31 December 2013 - restated
External Total Depreciation Segment profit
Revenue Revenue before taxation
and amortisation
GBPm GBPm GBPm GBPm
Language Services 150.5 150.5 1.7 24.6
Technology 115.6 115.6 3.4 (16.4)
--------- --------- ------------- ------------------
Sub total 266.1 266.1 5.1 8.2
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)
==================
notes to the financial INFORMATION (Cont.)
Geographical analysis of external revenues by country of domicile is as follows:
2014 2013
GBPm GBPm
UK 70.0 63.9
USA 72.1 77.2
Republic of Ireland 22.1 24.7
Netherlands 20.9 21.0
Belgium 17.2 16.1
Germany 15.2 15.4
Canada 10.9 11.8
Rest of World 32.0 36.0
------ ------
260.4 266.1
====== ======
Geographical analysis of non-current assets excluding deferred tax is as follows:
2014 2013
GBPm GBPm
UK 172.6 173.8
USA 33.7 40.9
Rest of World 5.4 5.5
------ ------
211.7 220.2
====== ======
Goodwill and intangibles recognised on consolidation are included in the country which initially acquired the business giving rise to the recognition of goodwill and intangibles.
notes to the financial INFORMATION (Cont.)
3. OTHER REVENUE AND EXPENSES
Group operating profit is stated after charging/(crediting):
2014 2013
GBPm GBPm
Included in administrative expenses:
Research and development expenditure 28.1 28.8
Bad debt charge 0.3 0.8
Depreciation of property, plant
and equipment - owned assets 4.5 4.9
Depreciation of property, plant
and equipment - leased assets 0.2 0.2
Amortisation of intangible assets 7.1 7.5
Operating lease rentals for plant
and machinery 0.5 0.6
Operating lease rentals for land
and buildings 6.8 6.9
Net foreign exchange gains (2.2) -
Share based payment charge 1.4 1.2
The net foreign exchange gains above arose due to movements in foreign currencies between the time of the original transaction and the realisation of the cash collection or spend, and the retranslation of US Dollar and Euro denominated intra-Group loans.
One-off costs
2014 2013
GBPm GBPm
Historic litigation costs (0.3) 1.4
Onerous lease - 0.4
Redundancy costs 0.5 2.5
Impairment charge - 20.4
Other (0.2) 0.4
------ -----
- 25.1
====== =====
One-off costs relate to costs associated with the ongoing historic litigation claim against the Group, the costs associated with the re-organisation of the Group in late 2013 and a goodwill impairment write down relating to the Group's Content and Analytic Technologies CGU.
These have been separately disclosed in the income statement to provide a better guide to underlying business performance.
4. INCOME TAX
(a) Income tax on profit:
Consolidated income statement
2014 2013
GBPm GBPm
Current taxation
UK Income tax charge
Current tax on income for the period 0.9 0.7
Adjustments in respect of prior periods 0.1 0.2
1.0 0.9
------ ------
Foreign tax
Current tax on income for the period 5.0 4.1
Adjustments in respect of prior periods (0.1) 0.3
------ ------
4.9 4.4
------ ------
Total current taxation 5.9 5.3
====== ======
Deferred income taxation
Origination and reversal of temporary
differences (3.1) (1.8)
Total deferred income tax (3.1) (1.8)
====== ======
Tax expense (see (b) below) 2.8 3.5
====== ======
Consolidated statement of other comprehensive income
2014 2013
GBPm GBPm
Current taxation
UK Income tax
Income tax charge on currency translation
differences on foreign currency equity
loans to foreign subsidiaries 1.1 0.1
------ ------
Total current taxation 1.1 0.1
====== ======
A tax credit in respect of share based compensation for current taxation of GBPnil (2013: GBPnil) has been recognised in the statement of changes in equity in the year.
A tax credit in respect of share based compensation for deferred taxation of GBPnil (2013: GBP0.2 million) has been recognised in the statement of changes in equity in the year.
(b) Factors affecting tax charge:
The tax assessed on the profit on ordinary activities for the year is higher than the standard rate of income tax in the UK of 21.5% (2013: 23.25%). The differences are reconciled below:
2014 2013
GBPm GBPm
Profit/(loss) on ordinary activities before
tax 9.4 (24.4)
------ -------
Profit/(loss) on ordinary activities at
standard rate of tax in the UK 21.5% (2013:
23.25%) 2.0 (5.7)
Expenses not deductible for tax purposes 0.5 0.9
Impairment of goodwill - 4.7
Adjustments in respect of previous years - 0.5
Capital allowances for the period in excess
of depreciation - (0.5)
Recognition of tax losses brought forward (2.1) -
previously not recognised
Utilisation of tax losses brought forward
previously not recognised (1.6) (1.0)
Current tax losses not available for offset 3.6 5.2
Effect of overseas tax rates 0.3 0.2
Other 0.1 (0.8)
Tax expense (see (a) above) 2.8 3.5
====== =======
5. EARNINGS PER SHARE
The calculation of basic earnings per ordinary share is based on a profit after tax of GBP6.6 million (2013: loss of GBP27.9 million) and 80,758,772 (2013: 80,283,053) ordinary shares, being the weighted average number of ordinary shares in issue during the period.
The diluted earnings per ordinary share is calculated by including in the weighted average number of shares the dilutive effect of potential ordinary shares related to committed share options. For 2014, the diluted ordinary shares were based on 81,373,392 ordinary shares that included 614,620 potential ordinary shares.
The following reflects the income and share data used in the calculation of adjusted earnings per share computations before one-off costs:
2014 2013
GBPm GBPm
Profit/(loss) for the year 6.6 (27.9)
One-off costs - 25.1
Amortisation of intangible fixed assets 7.1 7.5
Less: tax benefit associated with the
amortisation of intangible fixed assets
and one-off costs (1.4) (2.6)
------ -------
Adjusted profit for the year 12.3 2.1
====== =======
2014 2013
No. No.
Weighted average number of ordinary shares
for basic earnings per share 80,758,772 80,283,053
Effect of dilution resulting from share
options 614,620 939,379
----------- -----------
Weighted average number of ordinary shares
adjusted for the effect of dilution 81,373,392 81,222,432
=========== ===========
2014 2013
Adjusted earnings per ordinary share -
basic (pence) 15.10 2.57
Adjusted earnings per ordinary share -
diluted (pence) 14.98 2.54
There have been no material transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of this financial information.
6. INTANGIBLE ASSETS
Customer Intellectual Goodwill Total
Relationships Property
GBPm GBPm GBPm GBPm
Cost:
At 1 January 2013 19.6 60.2 212.0 291.8
Acquisition of subsidiaries 0.5 0.3 1.3 2.1
Currency adjustment - 0.1 0.2 0.3
--------------- ------------- --------- -----------
At 1 January 2014 20.1 60.6 213.5 294.2
Currency adjustment 0.1 - 0.6 0.7
--------------- ------------- --------- -----------
At 31 December 2014 20.2 60.6 214.1 294.9
=============== ============= ========= ===========
Amortisation:
At 1 January 2013 (9.9) (35.2) (12.2) (57.3)
Provided during the year (2.4) (5.1) - (7.5)
Impairment loss - - (20.4) (20.4)
---------------
At 1 January 2014 (12.3) (40.3) (32.6) (85.2)
Provided during the year (2.3) (4.8) - (7.1)
Currency adjustment 0.1 (0.1) - -
--------------- ------------- --------- ---------
At 31 December 2014 (14.5) (45.2) (32.6) (92.3)
=============== ============= ========= =========
Net book value:
At 31 December 2014 5.7 15.4 181.5 202.6
===============
At 1 January 2014 7.8 20.3 180.9 209.0
=============== ============= ========= =========
Customer relationships and intellectual property are amortised on a straight-line basis over their estimated useful lives of between 5 and 10 years. As from 1 January 2004, the date of transition to IFRS, goodwill is no longer amortised but is now subject to annual impairment testing.
7. ADDITIONAL CASH FLOW INFORMATION
Analysis of group net debt:
1 January Cash Cash acquired Exchange 31 December
2014 flow on acquisition differences 2014
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 18.2 4.4 - (0.5) 22.1
Loans (20.0) 11.0 - - (9.0)
---------- ------ ---------------- ------------- ------------
(1.8) 15.4 - (0.5) 13.1
========== ====== ================ ============= ============
1 January Cash Cash acquired Exchange 31 December
2013 flow on acquisition differences 2013
GBPm GBPm GBPm GBPm GBPm
Cash and cash equivalents 28.5 (9.6) 0.2 (0.9) 18.2
Loans (22.2) 2.2 - - (20.0)
6.3 (7.4) 0.2 (0.9) (1.8)
========== ====== ================ ============= ============
8. EVENTS AFTER THE STATEMENT OF FINANCIAL POSITION DATE
A final dividend for the year ended 31 December 2014 of 2.5 pence per share will be proposed at the Annual General Meeting and has not been included as a liability in the financial statements.
If approved by shareholders, the dividend will be payable on 5 June 2015 to shareholders on the register on 1 May 2015, with an ex-dividend date of 30 April 2015.
There are no other known events occurring after the statement of financial position date that require disclosure.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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