RNS Number:3567P
SDL PLC
04 September 2003
For Immediate Release 4 September 2003
SDL plc
Interim Results
For the Six Months Ended 30 June 2003
SDL plc ("SDL" or "the Group"), the globalization products and solutions
company, is pleased to announce its results for the six months to 30 June 2003.
Operational Highlights:
* Turnover up 10% at #30.0 million
* EBITDA of #2.1 million (2002 - #1.1 million)
* Operating profit before goodwill of #1.5 million (2002 - #0.3 million)
* Net cash resources of #6.3 million (2002 - #5.0 million)
* Net funds of #4.6 million (2002 - #1.9 million)
Commenting on the results Mark Lancaster, Chairman and Chief Executive of SDL
said:
"The first half of 2003 has proved to be stronger than anticipated, with our
turnover up 10% to #31 million and an operating profit before goodwill of #1.5
million. This is a major achievement considering the price pressure and
generally flat trading conditions that continue to beset most of the major
markets in which we operate. With one of the largest translation solution
infrastructures in the world combined with complete knowledge-based translation
technology, SDL is able to address the issues faced by customers requiring more
efficient translation from one language to another. This has been seen with our
existing customers utilising SDL WorkFlow technology and this forward looking
approach starting to bring in larger long-term deals and relationships."
For further information, please contact:
Mark Lancaster / Alastair Gordon Tel: 01628 410127
SDL
About SDL
SDL plc (London Stock Exchange: 'SDL') is the world's leading provider of
multilingual solutions offering scalable translation technology and services.
Its comprehensive and integrated offerings include multilingual content and
globalization management solutions, real-time translation technologies,
translation memory and a full range of internationalization and localization
services.
Since its founding in 1992, SDL plc has worked with numerous blue chip companies
in defining and executing on their global business strategies, including
Rockwell, Morgan Stanley, Hewlett-Packard, Sony, Adobe, Kodak, Siebel,
Microsoft, Sun Microsystems, William Hill, 3Com, Canon, IBM, Oracle and Volvo.
With more than 1200 staff, the company maintains its headquarters in the UK,
with 39 offices across North America, Asia and Europe. http://www.sdl.com.
Dear Shareholder,
Summary
The first half of 2003 has proved to be stronger than anticipated, with
operating profit before goodwill of #1.5 million (2002 - #0.3 million), a five
fold increase on the comparative period last year and a positive EBITDA of #2.1
million (2002 - #1.1 million). Revenues were #31.0 million, an increase of 10%
over the corresponding six months in 2002. This is a major achievement
considering the price pressure and generally flat trading conditions that
continue to beset most of the major markets in which we operate. We ascribe a
large part of this to the take up of our technology coupled with service
solutions and careful cost control. The Group's net funds were #4.6 million as
at 30 June 2003 (2002 - #1.9 million).
SDL now has one of the largest translation solution infrastructures in the
world. With offices in 24 countries, SDL is able to dovetail very effectively
with large blue chip companies that require a central control of their
localization or small companies with local presence. We have seen a significant
number of our larger customers consolidating their business by using a smaller
number of large vendors, a model we fit well with.
The customer base has been very loyal to SDL, with over 80% of revenues being
from repeat customers from the previous year and with at least 50% of the
revenue coming from customers that have been with the Group for more than 3
years. The benefits are also starting to come through our online translation
portals Freetranslation.com, a portal considered to be the market leader in
instant translation, with 1.5 million visitors per week, and Click2translate.com
that are becoming valuable business assets for rapid turnaround quality
translations.
Global connectivity has continued to grow during 2003 and customers are
requiring more efficient translation from one language to another, whether the
medium be the intranet, email, web or more traditional documentation. SDL's
infrastructure combined with the complete knowledge-based translation technology
addresses these issues very effectively. This has been seen with existing
customers including Morgan Stanley, Sony and Philips who utilise SDLWorkFlow
technology to meet their localisation needs and communication requirements. This
forward looking approach is also starting to bring in the larger long-term deals
such as Case New Holland, a multi-million euro technology/services deal, Canon
and Dell. We are also seeing a take up in our stand alone technology with some
key Enterprise level sales to organisations such as Sun Microsystems and NY
State Department of Motor Vehicles.
Outlook
We are seeing an encouraging level of interest in the market place from an
increasing number of companies that are looking to achieve their global goals
using creative solutions such as real time translation technology combined with
translation review and workflow automation.
The pricing pressure we experienced in the first half will continue to be
present in the medium term, however our technology and the infrastructure of our
translation services will offset this in 2004. The potential from global markets
is huge, but companies continue to struggle to effectively manage this
opportunity. Translation needs from companies and end users will diverge in two
directions, the higher quality route and the more instant, but acceptable
quality, route. Both will require technology to give the pricing levels required
to stimulate market growth. SDL is the only translation company to own
significant technology IPR, and this, combined with our global services
infrastructure, will position us well to meet the evolving market needs.
Mark Lancaster
4 September 2003
INTRODUCTION
We have been instructed by the company to review the financial information for
the six months ended 30 June 2003 which comprises the Consolidated Profit and
Loss Account, Consolidated Balance Sheet, Consolidated Cash Flow Statement,
Consolidated Statement of Total Recognised Gains and Losses and the related
notes 1 to 9. We have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with guidance contained
in Bulletin 1999/4 'Review of interim financial information' issued by the
Auditing Practices Board. To the fullest extent permitted by the law, we do not
accept or assume responsibility to anyone other than the company, for our work,
for this report, or for the conclusions we have formed.
DIRECTORS' RESPONSIBILITIES
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
REVIEW WORK PERFORMED
We conducted our review in accordance with guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices Board
for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data, and based thereon,
assessing whether the accounting policies and presentation have been
consistently applied, unless otherwise disclosed. A review excludes audit
procedures such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed in
accordance with United Kingdom Auditing Standards and therefore provides a lower
level of assurance than an audit. Accordingly we do not express an audit
opinion on the financial information.
REVIEW CONCLUSION
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2003.
Ernst & Young LLP
Reading
4 September 2003
6 months to 6 months to Year to
30 June 30 June 31 December
2003 2002 2002
notes #'000 #'000 #'000
NET TURNOVER
Existing operations 30,669 28,131 58,002
Acquisitions 8 334 - -
Total continuing operations 2 31,003 28,131 58,002
Operating profits on continuing operations 1,465 326 1,362
before amortisation of goodwill and
intangible assets
Amortisation of goodwill and intangible (2,424) (2,264) (4,701)
assets
OPERATING LOSS ON ORDINARY ACTIVITIES
BEFORE INTEREST AND TAXATION 3 (959) (1,938) (3,339)
Net interest payable and similar charges (45) (64) (179)
LOSS ON ORDINARY (1,004) (2,002) (3,518)
ACTIVITIES BEFORE TAXATION
Tax on profit on ordinary activities 4 (537) (138) (293)
LOSS ON ORDINARY (1,541) (2,140) (3,811)
ACTIVITIES AFTER TAXATION
LOSS ATTRIBUTABLE TO SHAREHOLDERS (1,541) (2,140) (3,811)
Dividends - - -
RETAINED LOSS FOR THE PERIOD (1,541) (2,140) (3,811)
Pence Pence Pence
Basic and diluted loss per share 5 (2.85) (4.02) (7.10)
Unaudited Statement of Recognised Gains 6 months to 6 months to Year to
and Losses 30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Loss for the period (1,541) (2,140) (3,811)
Currency translation differences on 368 (409) (144)
foreign currency net investments
7
Total losses recognised in the period (1,173) (2,549) (3,955)
30 June 30 June 31 December
2003 2002 2002
notes #'000 #'000 #'000
FIXED ASSETS
Intangible Assets 26,876 31,065 28,873
Tangible Assets 3,554 3,547 2,986
30,430 34,612 31,859
CURRENT ASSETS
Debtors 13,086 12,124 10,539
Cash at bank and in hand 6,539 6,368 6,721
19,625 18,492 17,260
CREDITORS: amounts falling due within one year 6 (15,140) (13,994) (12,804)
NET CURRENT ASSETS 4,485 4,498 4,456
TOTAL ASSETS LESS CURRENT LIABILITIES 34,915 39,110 36,315
CREDITORS: amounts falling due after more than (502) (2,193) (1,029)
one year
PROVISIONS FOR LIABILITIES AND CHARGES (251) (494) (267)
34,162 36,423 35,019
CAPITAL AND RESERVES
Called up share capital 7 541 540 541
Share premium account 7 43,549 43,548 43,549
Shares to be issued 7 316 - -
Profit and Loss Account 7 (10,244) (7,665) (9,071)
SHAREHOLDERS' FUNDS - Equity interests 7 34,162 36,423 35,019
The Interim Financial Information presented in this Interim Report was approved
by the Board of Directors on 4 September 2003
6 months to 6 months to Year to
30 June 30 June 31 December
2003 2002 2002
Notes #'000 #'000 #'000
NET CASH INFLOW/ (OUTFLOW) FROM OPERATING 1,599 (1,193) 2,223
ACTIVITIES
RETURN ON INVESTMENTS AND
SERVICING OF FINANCE
Interest received 74 122 134
Interest paid (93) (182) (264)
Finance lease Interest (26) (3) (49)
(45) (63) (179)
TAXATION
Overseas and UK tax paid (183) (273) (382)
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Payments to acquire tangible fixed assets (1,184) (583) (1,158)
Receipts from sale of tangible fixed assets - - 60
(1,184) (583) (1,098)
ACQUISITIONS AND DISPOSALS
Purchase of subsidiary undertakings 8 (789) (5,562) (5,578)
Net cash acquired with subsidiary 623 (1,976) (1,976)
undertakings
(166) (7,538) (7,554)
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 21 (9,650) (6,990)
Proceeds from issue of ordinary share - 7,148 7,150
capital
Repayment of short term and long term loans (73) (1,226) (2,129)
Capital element of finance lease rental (139) (235) (537)
payments
(212) 5,687 4,484
(DECREASE) IN CASH IN THE PERIOD (191) (3,963) (2,506)
6 months to 30 6 months to Year to
June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
(a) Reconciliation of operating loss
to net cash inflow/(outflow) from operating
activities
Operating loss (959) (1,938) (3,339)
Depreciation 646 749 1,631
Amortisation of goodwill and intangible assets 2,424 2,264 4,701
Loss on disposal of tangible fixed assets 5 - 232
Increase/(decrease) in debtors (2,326) 2,246 4,029
Increase/(decrease) in creditors and provisions 1,441 (4,125) (4,887)
Exchange gain/(loss) on cash, liquid resources 368 (389) (144)
and loans
Net cash inflow/(outflow) from operating 1,599 (1,193) 2,223
activities
(b) Reconciliation of net cash flow to
movement in net funds
Decrease in cash (191) (3,963) (2,506)
Cash outflow from decrease in debt and lease 212 1,460 2,319
financing
Change in net funds resulting from cashflows 21 (2,503) (187)
Loan notes and finance leases acquired with - (4,558) (4,558)
subsidiaries
Share issue for loan notes - - 347
Movement in net funds 21 (7,061) (4,398)
Net funds at start of period 4,600 8,998 8,998
Net funds at end of period 4,621 1,937 4,600
(c) Reconciliation of net funds to
Balance Sheet
Cash at bank 6,539 6,368 6,721
Current borrowing (230) (1,325) (221)
Current net cash 6,309 5,043 6,500
Finance leases (450) (892) (589)
Loan Notes (1,238) (2,214) (1,311)
Net funds at end of period 4,621 1,937 4,600
1. Basis of preparation
The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's audited financial statements for
the year ended 31 December 2002.
2. Turnover and segmental information
6 months to 6 months to Year to
30 June 30 June 31 December
Globalization solutions: 2003 2002 2002
#'000 #'000 #'000
Continuing operations 30,669 28,131 58,002
Acquisitions 334 - -
Total continuing operations 31,003 28,131 58,002
6 months to 6 months to Year to
30 June 30 June 31 December
Geographic: 2003 2002 2002
#'000 #'000 #'000
United Kingdom 1,872 1,761 4,229
Rest of Europe 11,738 8,437 19,582
North America 15,443 16,601 29,030
Rest of the World 1,616 1,332 5,161
Total existing operations 30,669 28,131 58,002
United Kingdom 17 - -
Rest of Europe 304 - -
North America 13 - -
Total acquisitions 334 - -
Total continuing operations 31,003 28,131 58,002
Further analysis of turnover, profit and net assets by geographical segment is
not disclosed because the directors consider such disclosure would be
prejudicial to the business.
The turnover on the face of the profit and loss account has been analysed
between the existing operations and the acquisitions during the period. However,
due to the ongoing integration of the businesses it is not possible to give a
meaningful split between existing operations and the acquisitions as relates to
the operating profit.
3. Loss on Ordinary Activities Before
Interest and Taxation
6 months to 6 months to Year to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Is stated after charging:
Research and development expenditure 1,350 1,490 3,018
Depreciation of owned and leased assets 646 749 1,631
Amortisation of goodwill and intangibles 2,424 2,264 4,701
4. Taxation
6 months to 6 months to Year to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
UK Corporation Tax:
UK Current tax on income for the period 63 - 85
Adjustments in respect of prior periods - - -
63 - 85
Foreign Tax:
Current tax on income for the period 381 138 282
Adjustments in respect of prior periods 93 - (74)
474 138 208
537 138 293
5. Earnings per share
6 months to 6 months to Year to
30 June 30 June 31 December
2003 2002 2002
m m m
Basic weighted average number of shares 54.1 53.3 53.7
Employee share options and shares to be issued 2.0 1.7 1.1
Diluted weighted average number of shares 56.1 55.0 54.8
Note that where the effect of share options is anti-dilutive the diluted
earnings per share will be the same as the basic.
6. Creditors: Amounts falling due within one year
6 months to 6 months to Year to
30 June 30 June 31 December
2003 2002 2002
#'000 #'000 #'000
Trade creditors 3,730 4,132 2,829
Bank overdrafts 230 1,325 221
Loan notes 902 471 524
Obligations under finance lease contracts 295 441 347
Corporation tax 1,002 516 811
Other creditors and accruals 8,981 7,109 8,072
15,140 13,994 12,804
Since 30 June 2003 #637,000 of the above loan notes have been repaid.
7. Equity shareholders' funds
Share Capital Share Premium Shares to be Profit & Loss Total
issued
#'000 #'000 #000 #'000 #'000
At 31 December 2002 541 43,549 - (9,071) 35,019
Shares to be issued - - 316 - 316
Loss for the period - - - (1,541) (1,541)
Currency realignment - - - 368 368
At 30 June 2003 541 43,549 316 (10,244) 34,162
8. Acquisitions
On 18 April 2003 the Group acquired the whole of the issued share capital
of Lomac SP z.o.o. and its subsidiary companies ("Lomac") for a
consideration of #1.22 million. The consideration was satisfied by cash of
#0.90 million and the proposed issue of #0.32 million in shares. All of the
shares and #0.11million of the cash consideration are being deferred over
the next 3 years, of which #0.06 million of these shares are subject to
profit targets being met by Lomac.
A summary analysis of the acquisition of Lomac is as follows:
#'000
Net assets at the date of acquisition 848
Fair value adjustments arising on a review of the assets and liabilities of Lomac (20)
Write-off of goodwill arising on acquisitions made by Lomac (35)
Revised net assets 793
Goodwill arising on acquisition 426
1,219
Discharged by:
Cash paid 747
Deferred cash 114
Shares to be issued 316
Costs associated with the acquisition 42
1,219
Goodwill arising on the acquisition has been capitalised and is being amortised
over 8 years in line with Group policy. The investment has been included in the
Group's balance sheet at its fair value at the date of acquisition.
9. Results for 2002
The accounts in this statement do not comprise full accounts within the
meaning of section 240 of the Companies Act 1985. The figures for the year
ended 31 December 2002 have been extracted from the 2002 Annual Report but
do not comprise statutory accounts for that period. The audited financial
statements have been delivered to the Registrar of Companies. The Auditors
made an unqualified report on those accounts and their report did not
contain any statement under section 237(2) or (3) of the Companies Act
1985.
Directors
Mark Lancaster (Chairman and Chief Executive)
Alastair Gordon (Chief Financial Officer)
Cristina Lancaster (Chief Operations Officer)
Keith Mills (Chief Technical Officer)
Christopher Batterham*
John Matthews*
* Non-executive directors
Company Secretary
John Adams
Registered Office
Globe House
Clivemont Road
Maidenhead
Berkshire
SL6 7DY
Registered in England No. 2675207
Registrars
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
This information is provided by RNS
The company news service from the London Stock Exchange
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