SDL plc: Half Year Results for the Six Months Ended 30 June 2018

MAIDENHEAD, England, August 6, 2018 /PRNewswire/ --

   
    Unaudited Results              2018                2017 (restated[1])
    Six months to 30 June
                                  Total         Continuing      Discontinued     Total

                                   GBPm               GBPm              GBPm      GBPm
    Revenue                       143.1              139.2               2.0     141.2

    Adjusted EBITA[2]              12.0                8.3              (3.1)      5.2

    Profit before tax               7.8                6.0              14.9      20.9

    Basic earnings per share        6.8p               4.8p             18.1p     22.9p

    Adjusted diluted earnings
    per share[3]                   10.8p               7.0p             (3.8p)     3.2p

    Net cash                       22.5                                 26.1
    Free cash flow[4]              10.5                                           (1.5)
    Free cash flo
    conversion[5]                   78%                                            (16)%

Financial highlights from Continuing Operations 

• Revenue up 2.8% to £143.1m (H1 17: £139.2m), constant currency revenue growth^[6] of 6.0%
• Group Gross profit margin improved to 52.9% (H1 17: 50.5%)
• Adjusted EBITA grew 45% to £12.0m (H1 17: £8.3m), inclusive of £2.8m (net) capitalised research and development expenditure (H1 17: £nil)
• Profit before tax increased 30% to £7.8m (H1 17: £6.0m)
• Basic earnings per ordinary share up 42% to 6.8p (H1 17: 4.8p)
• Adjusted diluted earnings per share grew 54% to 10.8p (H1 17: 7.0p)

Operational highlights  

• Good progress against our transformation plan and stated strategic objectives
• Sharpened focus on higher value premium services content has positioned the Group for H2 growth
• Helix programme showing ongoing momentum and delivering benefits - on track with business case
• Investment in new products delivering largest ever pre-sales orders for our updated product - Studio 2019 launched last month

Subsequent events 

• The Group completed the acquisition of Donnelley Language Services for $77.5m on 22 July 2018.  This acquisition gives SDL greater exposure to the premium growth verticals and creates significant opportunity for revenue and cost efficiencies. The acquisition is expected to be earnings accretive in 2019

Adolfo Hernandez, SDL Chief Executive, said: 

"I am pleased to report that SDL has had a good start to the year. Importantly, we have been able to balance underlying operational progress, on-boarding customers onto our Helix platform, the evolution of our go-to-market strategy and investment in innovation with good financial results showing revenue growth, gross margin expansion and cost discipline. I expect these initiatives to continue to bear fruit in the second half of 2018 and beyond. Furthermore, the acquisition of Donnelley Language Solutions accelerates parts of our premium services strategy and provides the opportunity to apply the same operational improvement initiatives to the acquired business over time. The outlook for the full year is in line with management expectations."

About SDL PLC

SDL (LSE: SDL) is the global leader in content creation, translation and delivery. For over 25 years we've helped companies communicate with confidence and deliver transformative business results by enabling powerful experiences that engage customers across multiple touchpoints worldwide. Are you in the know? Find out why 85 of the top 100 global companies work with and trust us on SDL.com. Follow us on Twitter, LinkedIn and Facebook.

References:

^[1] Prior year numbers have been restated to reflect the adoption of IFRS 15: Revenue from Contracts with Customers.  Further details are provided in Note 11.

^[2] Adjusted EBITA: Operating profit from Continuing Operations (H1 18: £7.8m, H1 17: £6.0m) before acquisition related amortisation (H1 18: £0.5m, H1 17: £2.3m) and Exceptional items (H1 18: £3.7m, H1 17: £nil)

^[3] Adjusted earnings: Profit after tax before the impact of exceptional items, acquisition related amortisation and profit on disposal of discontinued businesses

^[4] Free cash flow: Cash generated from operations after interest and tax costs, maintenance capital expenditure and capitalised Research and Development expenditure.

^[5] Free cash flow conversion: Free cash flow generated from / (used by) the business expressed as a % of adjusted EBITDA from Continuing Operations.

^[6] Constant currency revenue growth: Calculated by applying 2018 monthly exchange rates to the 2017 monthly results. Average rates for the Group's two principal foreign currencies (USD and €) are set out in the CFO review.

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