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SDL

SDL 474.84p 3.6  0.8%
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SDL | Half Year Report | RNS

RNS Number : 6690M
SDL PLC
01 August 2017
 

1 August 2017

SDL plc

Interim results for the six months ended 30 June 2017

Delivering our transformation

SDL plc ("SDL", "the Group" or the "Company"), a leader in global content management and language translation software and services, announces its unaudited interim results for the six months ended 30 June 2017. 

 


Unaudited 6 months to 30 June 2017

Unaudited 6 months to 30 June 2016









Continuing

£m

Discontinued

£m

Total

£m

Continuing

£m

Discontinued

£m

Total

£m








Income Statement







Revenue

139.1

2.0

141.1

120.4

13.3

133.7








Profit / (Loss) Before Interest, Tax, Amortisation and One-off Items2

8.0

(3.1)

4.9

11.6

(2.1)

9.5








Profit / (Loss) before tax

5.7

14.9

20.6

4.9

(4.0)

0.9








Earnings per ordinary share

basic (pence)

4.65

18.08

22.73

5.60

(4.96)

0.64








Adjusted Earnings per ordinary Share - basic (pence)

6.95

(3.76)

3.19

12.10

(2.99)

9.11








Statement of Financial position







Total equity



179.3



178.0

Cash and cash equivalents



26.1



15.21

Interest bearing loans and borrowings



-



(1.9)

 

Financial highlights

·      Revenue from Continuing Operations up 15.5% to £139.1 million (1H16: £120.4 million), up 4.9% at constant currency

·      Language Services revenue up 19.3% to £89.5 million (+8.9% at constant currency)

·      Language Technologies revenue up 17.5% to £22.8 million (+6.0% at constant currency)

·      Global Content Technologies revenue up 2.6% at £26.8 million (down 7.7% at constant currency), against strong prior period perpetual licence fees

·      Adjusted PBITA2for Continuing Operations was £8.0 million, Total Adjusted PBITA £4.9 million (1H16: Continuing Operations £11.6 million, Total £9.5 million)

·      Language Services PBITA £5.4 million (1H16: £8.8 million) and margin 6.0% (1H16: 11.7%), as a result of investment and higher short-term use of freelancers to meet the growth in the period

·      Technology Divisions Continuing Adjusted PBITA £2.6 million (1H16: £2.8 million)

·      Adjusted Continuing Operations Earnings Per Share of 6.95p (1H16: 12.10p)

·      Cash generated from Continuing Operations before One-off items of £1.6 million (1H16: £14.4m). Cash absorbed by total operations of £6.1 million (2016: Cash generated from total operations: £6.4million)

·      Period-end net cash increased to £26.1 million (30 June 2016: £13.3 million), following the sale of Non-Core businesses

 

Operational highlights

·      Good progress against our 2017 plan to transform the sales and productivity engines of the business

·      22 cross-sell deals and 77 up-sell deals (1H16: 29 cross sell, 84 up-sell)

·      21 deals in Life Sciences, Marketing Solutions and Machine Translation (1H16: 12)

·      Premium Services revenue £15.4 million (1H16: £10.5 million; Full Year 2016 £22.5 million3)

·      Technology ARR (Annual Recurring Revenue) up 6.0% to £63.5 million at 30 June 2017 (30 June 2016: £60.0 million); Language Services RRR (Repeat Recurring Revenue) 93% on a Last Twelve Months basis (1H16: 93%)

·      Linguist utilisation 50.5% (1H16: 50.0%, Full Year 2016: 48.5%)

·      Launch of Machine Translation solution for the commercial market, 'Enterprise Translation Server', and Neural MT towards the end of the period

·      Automation programme on track. First phases now being rolled out across the business and a number of elements brought forward by approximately six months

·      Management team has continued to be strengthened, including the appointment of Jim Saunders as Chief Product Officer

 

1 £15.1m cash on balance sheet £0.1m disclosed in Assets held for sale

2 Profit Before Interest, Tax and Amortisation, adjusted for one-off items and disposal of non-core businesses

3 FY2016 premium revenues restated from £9.4m to include existing customers' Life Sciences divisions

 

 

Commenting on the results and the outlook for the second half, Adolfo Hernandez, CEO of SDL, said:

"In 2016, we set out a clear 3-year strategy to deliver a sustainable return to higher rates of earnings growth over the medium to long term, through a renewed go-to-market strategy, a major systems transformation programme and investment in innovation.

In the first half, we clearly demonstrated that, with the right focus, SDL can drive its top line. We have performed well against our sales KPIs, in particular by growing the Life Sciences segment and in Asia. These customers have high long-term value to the Group. However, this sales growth has come ahead of the operational efficiencies we are investing to deliver and has incurred higher costs of servicing, predominantly through the use of freelancers. We do not expect the impact of these higher costs in the first half to be recoverable in the second half.

We do expect an improved profit performance in the second half. However, the first half performance has underlined the importance of the actions already under way to invest in our turnaround. We have therefore made the considered decision to maintain our investment plans for the second half. As a result, we expect margins, on an improving revenue performance, to be slightly below those we achieved in the second half of 2016.

Our market opportunity is more exciting than ever, as we deploy our technologies and services to help our customers to manage, translate and deliver localised content on a global scale. We are confident that we have the right strategy to succeed."

For further information please contact:

 

SDL plc

01628 410100

Adolfo Hernandez, CEO

Xenia Walters, Interim CFO




FTI Consulting LLP

0203 727 1000

Edward Bridges


Emma Appleton


 

About SDL

SDL (LSE:SDL) is the global innovator in language translation technology, services and content management. Over the past 25 years we've helped companies deliver transformative business results by enabling powerful, nuanced digital experiences with customers around the world. Are you in the know? Find out why 78 out of the top 100 global brands work with us at SDL.com and follow us on Twitter, LinkedIn and Facebook.

 

 

 

Chairman's Statement

I am pleased to report on a half year of continued progress for SDL. Since Adolfo Hernandez became CEO in April 2016, the business has been undertaking a significant transformation.

As a Board, we decided to commence this transformation because we felt that SDL had been failing to achieve its full potential when considering the opportunities we believed existed within our market place. To be specific, our growth in revenue, particularly within our Language Services business had been consistently lower than the market. Given the growth in content to be translated and the drive of companies to access global markets earlier in their development, we believed that SDL was serving an exciting growth market. Since we made these strategic decisions to re-position our business, the market continues to confirm our assumptions.

Furthermore, we continue to believe that SDL has the strongest portfolio of technology assets to offer to this growth market. Our results confirm this assumption.

During this first half, we have achieved improved revenue growth as a result of the changes Adolfo and his team have implemented. Whilst this is a very pleasing result, it has exposed the fact that the delivery capabilities of the business are still only partially through their transformation. As a result, the level of profit we have delivered in the first half has been below our expectations.

Despite these challenges, as you will read in the rest of this report, we do understand the short term issues which have caused this reduction in profitability, and we have begun to implement plans which will remedy the situation. Many of these actions were already under way.

Most importantly, we see continued strength in demand, improving customer satisfaction with our delivery capability and a work force that is growing in confidence. The Executive Team has been further strengthened in the first half with the recruitment of Jim Saunders as Chief Product Officer.

Business transformations require considerable skill, experience and resilience. I believe that we have the leadership and the talent among our work force to ensure that SDL fully delivers on its potential.

 

David Clayton

Chairman 

 

 

 

CEO Review

Summary Performance

 

SDL delivered a strong sales performance in the first half, with a particularly pleasing performance in our new, premium, verticals. However, higher costs of delivering on new initiatives and planned investment resulted in lower profitability compared to the same period last year.  

 

Language Services delivered sales growth of 19.3% (8.9% at constant currency) and benefited from the implementation of our new go-to-market strategy. However, Language Services Gross Margins were below our expectations and reduced to 38.1% from 43.0% in 1H16, primarily as a result of higher freelancer costs to meet the growth and changing mix in the period. This is a short-term impact and it is our strategy to increase the proportion of services performed by in-house staff, at higher margin. Our Automation programme is designed to deliver structural improvements to Language Services margins and is on track to deliver these operational improvements from the late second half of the year onwards.

 

Language Technologies delivered a solid performance, with a notable increase in recurring revenues. Global Content Technologies recorded a fall in constant currency revenues, reflecting two large perpetual deals closed in the comparative period. Both technology divisions continued to trade profitably and at a similar level to last year, after higher investment in our product teams and product development, which is fully expensed.

 

Revenue from Continuing Operations was up 15.5% against the prior period at £139.1 million (1H16: £120.4 million), up 4.9% at constant currency. Total revenues were up 5.5% vs the prior period at £141.1 million (1H16: £133.7 million).

 

Profit before taxation, amortisation of intangible assets and one-off items ("PBITA") from Continuing Operations was £8.0 million and Total Operations was £4.9 million (1H16: Continuing Operations £11.6 million, Total £9.5 million). 

 

The Group's Profit After Tax amounted to £18.6 million (1H16: profit after tax £0.5 million).  The Group completed its disposal in the period and recognised a post-tax gain on sale of £20.4 million, before transaction costs of £2.6 million.

 

Net cash after borrowings rose £12.8 million to £26.1 million at 30 June 2017 (30 June 2016: £13.3 million).

 

Operational and strategy update

 

When I joined as CEO in April 2016, I found a company with a strong market position in its core areas of expertise in language solutions and global content technologies. Through our divestments programme, which was successfully completed in the first half of 2017, we have been able to return full organisational focus to these core areas.

 

We operate in large and growing markets. Moreover, the needs of our customers are changing as they seek to exploit the opportunities of global growth while managing the explosion of digital content, the multiplication of digital communications channels and the rising expectations of consumers. We believe that SDL is uniquely positioned with our combination of services, technologies and global scale to serve the changing requirements of enterprises, many of whom are at the forefront of their industries.

However, the Group must also adapt and modernise before we can fully realise the opportunity we have to lead in our markets. This is particularly the case in the Language Services division, which has been held back by legacy systems and processes. Not only does the Group intend to remove these impediments, we seek to become one of the most efficient and effective service providers in the market, making the most of our valued in-house staff and freelancer community and delivering new levels of service and insights to our customers.

Therefore, at the end of 2016, we set out a 3-year strategy to transform the Group by renewing our sales and productivity engines and investing in innovation, particularly Cloud Services and Machine Translation. If 2016 was the year of analysis and preparation, 2017 is the year of execution and implementation. There is no escaping that this puts significant demands on the business but while we must continue to react tactically to some of the challenges that emerge, we are confident that we have the right strategy and are executing against the major elements.

Focus on sales performance 

At the end of last year, we launched a renewed sales model and go-to-market strategy. For our customers, we aim to become more agile, simpler to work with, more solutions-focused and to be seen as long-term strategic partners.

The vertically-oriented sales teams have improved key account management resulting in growth of 64% growth in our top 10 accounts compared to the first half of 2016. We have developed cross and up-sell programmes across the full range of SDL's offerings, delivering 22 new cross-sell and 77 upsell wins in the first half. An increased focus on premium services such as Life Sciences and Marketing Solutions has driven premium language services sales of £15.4 million in the first half, compared to £10.5 million in 1H16 and £22.5 million for the full year 2016. Connecting into the rest of an enterprise's content ecosystem continues to be a top focus for SDL, as this makes us easier to do business with and enables customers to give work to us faster and more easily. 48 connectors are now available.

Our financial goals include improving the quality of revenue across the business. In the Language Services business, we have very high repeat revenues from our customer base (June 2017 LTM: RRR 93%) but there are still opportunities to increase share of spend and move up the value chain with many of our customers. In the technology divisions, although we still benefit from perpetual licence fees, the clear trend is towards cloud and subscription models and our Annual Recurring Revenue was £63.5 million at the end of June 2017 an increase of 6%.

The impact of sales shift on Gross Margin in the first half

In the Language Services division, some of our sales growth in the first half came at a short-term cost to our margin. Our Language Services Gross Margin reduced to 38.1% in 1H17 from 43.0% in 1H16. A shift to new verticals had a positive impact of 1.6 percentage points. However, higher freelancer costs to service a change in mix had a negative impact of 3.8 percentage points. It is SDL's strategy to increase the number and productivity of in-house translators and we are seeking to reduce the proportion of freelancer costs in the second half. Our Language Services revenue growth in Asia-Pacific (1H17: up 40% at constant currency to £13.1 million) also reduced Gross Margin by 0.8 percentage points, due to set-up costs and lower use of Machine Translation in Asian languages such as Japanese. We expect Machine Translation quality to continue to improve, which will increase productivity in Asia in the future. Other factors including price renegotiations on renewal, wage inflation and new staff all each had a small impact on Gross Margin, totalling 1.9 percentage points. 

Re-engineering for productivity

In late 2016, we announced that we would be investing in new systems and infrastructure to support and automate our localisation processes and to provide enhanced capabilities, including data analytics and business intelligence.

During the first half of the year, we completed our network and storage upgrade, implemented our BPM (Business Process Management) Core and launched our Freelancer Portal. We are therefore pleased to report that this set of programmes is on track and in some areas we have pulled forward investments by around six months. Although this will result in higher costs this year, we will see the benefits from these investments sooner in 2018. Costs relating to these programmes are capitalised.

The implementation of the systems and infrastructure upgrade will have a material impact on productivity and the margins that we can expect in Language Services. Once fully rolled out over the next 18 months, we would expect a mid to high single-digit percentage positive impact on Language Services Gross Margin as a result of lower project management costs and higher utilisation of our in-house translators.

In addition, there are a number of other benefits to the systems upgrade. These include scalability and operational leverage, improved visibility for resource and capacity planning, business intelligence and data - which we can share with our customers - and a flexible platform for continual service innovation.

Continuous Innovation

SDL remains one of the industry's leading innovators and this is clearly demonstrated by our Machine Learning activities. We believe that any language services provider without its own capabilities in Machine Translation will be potentially be disadvantaged over the long-term. Machine Translation requires a combination of algorithms and training data but also a delivery and support model when serving enterprise clients and SDL has all these assets.

We launched SDL Enterprise Translation Server (ETS), our secure machine translation solution, for commercial markets in the first half and have already seen wins with some of the world's leading brands. SDL ETS has recently been enhanced with Neural MT technology, and as a result we have been able to demonstrate up to 30% improvement in performance to our clients for certain language pairs. Machine Translation and Neural MT have a long way to go but rapid progress is now being made.

SDL will continue to innovate and it is our intention to leverage technology to offer new and exciting solutions to the market, some of which, over time, could result in a step-change in our opportunities.

Summary

SDL's first half results demonstrate good early progress in sales performance, albeit servicing costs have been higher in the short term. We are taking action to address this in the second half but we are unlikely to compensate for the shortfall seen in the first half. Investment in the business has risen as planned to support our turnaround and we have made the decision to keep in place our investment plans for the second half.

 

Over the medium to long term, our sales programme is designed to enhance quality of revenue, whilst our automation programme will support a structural improvement in margins. In combination, these strategic initiatives will deliver a stronger, more robust and more scalable business, with more predictable earnings growth.

 

 

Adolfo Hernandez

 

Chief Executive Officer

 

 

 

Operating and Financial Review

Key Performance Indicators

·     Revenue growth from Continuing Operations: up 15.5% (1H16: flat), up 4.9% at constant currency

·     Gross margin from Continuing Operations: 50.5% (1H16: 53.8%)

·     Adjusted PBITA margin from Continuing Operations: 5.7% (1H16: 9.6%)

·     Cash generated from continuing operations before one-off cash impacts: £1.6 million (1H16: £14.4 million). Total Group absorbed cash from operations £6.1 million (1H16: cash generated £6.4 million).

·     Technology Annual Recurring Revenue (ARR): £63.5 million at 30 June 2017 (2016: £60.0 million)

·     Language Services Repeat Revenue Rate (RRR): 93% (LTM)

·     Premium revenue: £15.4 million (1H16: £10.5 million; FY16: £22.5 million)

·     Upsell deals: 77 (1H16: 84), Cross-sell deals: 22 (1H16: 29)

·      Wins in Life Sciences: 4 (1H16: 3), Machine Translation :11 (1H16: 9), Marketing Solutions: 6 (1H16: nil) 

·     Linguistic utilisation: 50.5% (1H16: 50.0%, FY16: 48.5%)

Definitions of these KPIs and the Board's rationale for their use are set out in the Appendix to this announcement.

 

Language Services (contributing £89.5 million or 64% of Continuing Operations revenue and £5.4 million of PBITA) (1H16: £74.9 million or 62% of Continuing Operations revenue and £8.8 million of PBITA).

 

Revenue in 1H17 was £89.5 million, 19.3% up on the prior period, 8.9% at constant currency. Repeat Revenue Rate in the period was 93% on a Last Twelve Months (LTM) basis (FY2016: 93%). 

 

The Group has made good progress on its strategic objectives,

·     The Group has grown sales in premium markets from £10.5 million in 1H16 to £15.4 million, led by the Life Sciences division

·     The Marketing Solutions and SMB (Small-Medium Business) teams have been further developed in the period

·     Language Services revenues in Asia have risen to £13.1 million (1H16: £8.2 million)

 

Revenues in the US have remained in line with last year on a constant currency basis and trading in EMEA has been depressed as some customers have been operating on lower activity cycles.

The Group retains a broad customer base with the top 30 customers representing 56% of Language Services revenues.

 

Language Services PBITA margin fell from 11.7% in the 6 months ended 30 June 2016 to 6.0% in the 6 months ended 30 June 2017. The fall in margin has been driven by a number of factors including:

 

·     Increased freelancer costs caused due to the complexity and language mix of work received in the period

·     Strategic investments in APAC and new staff recruitment building our premium verticals

 

The Group continues to focus on commercial opportunities and operational efficiencies to offset these impacts. The Group has also made good progress with its operational efficiency transformation. This programme did not impact first half margins as initial deployments were made towards the end of the half. It will be rolled out over the second half and will start to drive improved margins in late 2017 and beyond.

Language Technologies (contributing £22.8 million or 17% of Continuing Operations revenue and £0.7 million PBITA) (1H16: contributing £19.4 million or 16% of Continuing Operations revenue and £0.5 million PBITA).

 

Revenue in 2017 was £22.8 million, 17.5% up on the prior period, 6.0% on a constant currency basis. Recurring revenues grew 20.2%, 8.7% on a constant currency basis. Annual Recurring Revenue ("ARR") increased by 10.7% to £24.9 million (30 June 2016: £22.5 million).

 

The revenue increase was driven by strong growth in Translation Productivity and Translation Management while Machine Translation activity was impacted by a slowdown in US Government revenues following the US elections.

 

Language Technologies PBITA margin was 3.2%, an increase of 0.5% in the period.  Margins have remained substantially at prior period levels but have included increased investment in the development of Neural MT.

 

During the first half, we released a number of product upgrades across the Language Technologies portfolio. SDL TMS releases delivered improvements to its UI, quality metrics, APIs and deeper integration to SDL Trados Studio. SDL Managed Translation, our self-service cloud translation platform, was enhanced for multi-vendor support, reporting and analytics. We also launched a Managed Service offering, allowing clients to outsource to SDL the day-to-day management, setup and configuration of their SDL Managed Translation solution.

 

SDL continued to build out its Connector strategy, releasing a number of integrations in the period, including to SharePoint, YouTube, Salesforce Service Cloud (Knowledge), Salesforce Live Agent (Chat), Adobe Experience Manager and cloud storage platforms, including DropBox. The launch of these Connectors significantly increases the ease with which customers can share high-volume content with SDL and is expected to support increased revenues in future periods.

Our proprietary Machine Translation technology is a key differentiator for the Group. During the first half we launched our Secure Enterprise Translation strategy, expanding into commercial markets and focusing on enterprises for which security, data privacy, domain specificity, high volumes, connectors, support and service are critical. We launched 'Enterprise Translation Server' (ETS) for the commercial market, a product tried and tested in the government space over the past 15 years. Towards the end of the period, we added Neural Machine Translation as part of ETS, observing improvements of up to 30% for language pairs such as English to German. ETS is available on both a perpetual licence model and a new term or subscription model.

Internally, our MT platform will drive competitiveness and improved internal translator efficiency going forward.

Global Content Technologies (contributing £26.8 million or 19% of Continuing Operations revenue and £1.9 million of PBITA) (1H16: contributing £26.1 million or 22% of Continuing Operations revenue and £2.3 million PBITA).

 

Revenue in 2017 was £26.8 million, 2.7% up on the prior period and down 7.7% on a constant currency basis.  ARR grew 2.9% to £38.7 million (30 June 2016: £37.5 million). 

The fall in revenue in the period was the result of lower perpetual licence sales in the period compared to a very strong performance 12 months ago.  This fall has been partially offset by increased SaaS licence sales in the period. Recurring revenues are 15.4% up at £19.2 million, 3.5% on a constant currency basis.

PBITA fell £0.4 million to £1.9 million in the period.  The fall in PBITA has been driven by the impact of reduced perpetual sales offset by increased SaaS revenues in the period.

SDL has market-leading Global Content Technologies products and has continued to invest in product development during the period. At the start of 2017, Gartner highlighted the modern architecture and flexible deployment models of SDL WEB, our Web Content Management technology. In addition, the revamped Digital Experience Accelerator (DXA) that provides a quick-start foundation for digital projects has been positively received by industry analysts and customers.

We have invested in helping our customers optimise their content and streamline workflow with in-context review and tighter integration to SDL's market leading translation products. In addition, SDL announced a partnership with enterprise content creation solution provider, Acrolinx to allow customers to optimise the multilingual content creation process across all digital channels.

Our focus for the remainder of the year is on delivering our next major product releases that will help our customers to create and manage their digital experience journeys. The introduction of a unified content interaction services layer, will provide a single delivery environment across the SDL WEB and Knowledge Center solutions.  This will allow our customers to offer seamless customer journeys across pre-sales, commerce and post sales, blending content from their marketing, commerce, product and support teams. We are also developing new personalisation capabilities for our SDL WEB and SDL Knowledge Center customers that leverage SDL's Machine Learning technologies.

Non-Core businesses (contributing £2.0 million of revenue and losses of £3.1 million PBITA) (1H16: contributing £13.3 million of revenue and losses of £2.1 million PBITA).

 

The board announced its decision to sell its Non-Core Businesses, which represents a separate major line of business, in January 2016. The results of the Non-Core Businesses segment have therefore been disclosed as discontinued operations in these interim results.

Our Non-Core businesses in the first half of 2017 included our Fredhopper and Social Intelligence businesses. We completed the disposals of these businesses in March and May 2017 respectively. These businesses generated a profit on sale of £20.6 million and generated a cash inflow of £22.3 million, £21.0 million after associated disposal costs.     

 

Earnings Per Share

Diluted Earnings Per Share when adjusted for one-off items and amortisation of intangibles ("adjusted Diluted EPS") for continuing operations decreased 43% to 6.85 pence (1H16: 11.98 pence). The Total Group diluted EPS increased to 22.42 pence (1H16: 0.63 pence).

 

Cash flow

The Group's cash absorbed by continuing operations before one-off items was £1.6 million in 2017 (1H16: £14.4 million). The cash generation in the period was impacted by higher working capital requirements driven by increased turnover and an increased bonus payment, related to 2016 performance, being paid in the first half. The Total Group absorbed cash from operations of £6.1 million is stated after cash flows from discontinued operations (£3.7 million) and one-off cash flow impacts of £4.0 million (1H16: cash generated £6.4 million after discontinued operations (£2.1 million) and one-off cash flow impacts of £5.9 million).

 

The Group received a cash inflow of £22.3 million from its disposal of its remaining Non-Core businesses.  These proceeds have funded net income tax paid of £1.2 million (1H16: £4.2 million), capital expenditure of £5.4 million (1H16: £1.0 million) and an increased dividend of £5.1 million (1H16: £2.5 million).  The Group's capital expenditure in the first half includes the previously announced infrastructure investments to increase operational efficiency and capital costs associated with office relocations.  This investment expenditure will continue through the second half of the year and into 2018 as we roll out new systems.

 

As a result, net cash increased to £26.1 million at the period end (30 June 2016: £13.3 million).

 

Borrowing Facilities

The Group has a £25 million committed revolving credit facility with HSBC, expiring in August 2020. The agreement also includes a £25 million uncommitted Accordion Facility.  The Group has no drawn funds under this facility and hence an undrawn committed borrowing facility of £25.0 million at 30 June 2017.

 

Taxation

SDL is a global business and, as such, the Group's effective tax rate is influenced by the territorial mix of operating profits earned together with management judgement of the extent to which the Group's historic US tax losses are likely to be utilised.

 

The tax charge for the period is £2.0 million (2016: £0.4 million). This charge includes tax credits associated with amortisation, deferred tax on the net utilisation of tax losses and tax on discontinued operations.  The reported effective tax rate during the period was 9.7% (2016: 44.6%) as a result of the gain on disposal of Non-Core business being largely exempt from tax charges. The effective current tax rate for continuing operations is expected to be 28%.

 

Dividend

A final dividend for the year ended 31 December 2016 of 6.2 pence per share was paid on 9 June 2017.

 

 

Xenia Walters

Interim Chief Financial Officer

 

 

 

SDL plc

Interim Condensed Consolidated Income Statement

 



Unaudited 6 months to 30 June 2017

Unaudited 6 months to 30 June 2016










Notes

Continuing

£m

Discontinued

£m

Total

£m

Continuing

£m

Discontinued

£m

Total

£m









Sale of goods


16.7

1.6

18.3

19.4

10.8

30.2

Rendering of services


122.4

0.4

122.8

101.0

2.5

103.5

REVENUE

2

139.1

2.0

141.1

120.4

13.3

133.7









Cost of sales


(68.9)

(1.9)

(70.8)

(55.4)

(5.5)

(60.9)

 

GROSS PROFIT


70.2

0.1

70.3

65.0

7.8

72.8









Administrative expenses


(64.5)

(5.8)

(70.3)

(60.1)

(11.8)

(71.9)

OPERATING PROFIT/(LOSS)

3

5.7

(5.7)

-

4.9

(4.0)

0.9









 

OPERATING PROFIT / (LOSS) BEFORE TAX, AMORTISATION AND

ONE-OFF COSTS


8.0

(3.1)

4.9

11.6

(2.1)

9.5

Amortisation of intangible assets


(2.3)

-

(2.3)

(2.6)

(0.1)

(2.7)

 

One-off items


-

(2.6)

(2.6)

(4.1)

(1.8)

(5.9)



 

5.7

 

 

(5.7)

 

 

-

 

 

4.9

 

 

(4.0)

 

 

0.9

 









Profit on disposal of non-core business


-

20.6

20.6

-

-

-









PROFIT/(LOSS) BEFORE TAX


5.7

14.9

20.6

4.9

(4.0)

0.9









Tax expense

5

(1.8)

(0.2)

(2.0)

(0.4)

-

(0.4)

PROFIT/(LOSS) FOR THE PERIOD


3.9

14.7

18.6

4.5

(4.0)

0.5

 

 

SDL plc

Interim Condensed Consolidated Income Statement

(continued)

 


Unaudited

6 months to

30 June

2017

Unaudited

6 months to

30 June

2016





Pence

Pence

Earnings per share



Earnings per ordinary share - basic (pence)

 

22.73

 

0.64

Earnings per ordinary share - diluted (pence)

 

22.42

 

0.63

 

 



Earnings per share - continuing operations



Earnings per ordinary share - basic (pence)

 

4.65

 

5.60

Earnings per ordinary share - diluted (pence)

 

4.58

 

5.55




Earnings per share - discontinued operations



Earnings per ordinary share - basic (pence)

 

18.08

 

(4.96)

Earnings per ordinary share - diluted (pence)

 

17.83

 

(4.96)




 

Adjusted earnings per ordinary share calculations (basic and diluted) are shown in note 6.

 

 

 

SDL plc

Interim Condensed Consolidated Statement of Comprehensive Income

 



Unaudited

6 months to

30 June

2017

£m

Unaudited

6 months to

30 June

2016

£m





Profit for the period


18.6

0.5





Currency translation differences on foreign operations


0.9

15.5

Currency translation differences on foreign currency equity loans to foreign subsidiaries


(5.8)

(2.6)

Income tax credit / (charge) on currency translation differences on foreign currency equity loans to foreign subsidiaries


0.2

(0.4)

Other Comprehensive (Expense)/Income


(4.7)

12.5





Total Comprehensive Income


13.9

13.0





 

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.

 

 

 

SDL plc

Interim Condensed Consolidated Statement of Financial Position

 



Unaudited

30 June

2017

£m

Unaudited

30 June

2016

£m

Audited

31 December

2016

£m

ASSETS





NON CURRENT ASSETS





Property, plant and equipment


9.4

5.5

5.3

Intangible assets


146.9

146.8

151.9

Deferred income tax


6.9

4.3

8.4

Rent deposits


2.0

1.6

2.0



165.2

158.2

167.6

CURRENT ASSETS





Trade and other receivables


76.6

68.8

81.0

Corporation tax


3.2

2.7

0.9

Cash and cash equivalents


26.1

15.1

21.3

Assets held for sale


-

30.6

7.1



105.9

117.2

110.3

TOTAL ASSETS


271.1

275.4

277.9






LIABILITIES





CURRENT LIABILITIES





Trade and other payables


(76.5)

(68.1)

(88.5)

Current tax liabilities


(9.6)

(5.2)

(7.4)

Provisions


(1.7)

(2.1)

(1.1)

Liabilities held for sale


-

(15.4)

(7.4)



(87.8)

(90.8)

(104.4)

 

NON CURRENT LIABILITIES





Other payables


(1.6)

(2.6)

(1.6)

Loans and overdraft


-

(1.6)

-

Deferred tax liability


(0.3)

(2.1)

(1.1)

Provisions


(2.1)

(0.3)

(2.1)



(4.0)

(6.6)

(4.8)

TOTAL LIABILITIES


(91.8)

(97.4)

(109.2)

NET ASSETS


179.3

178.0

168.7

 

EQUITY





Share capital


0.8

0.8

0.8

Share premium


99.8

98.8

99.2

Retained earnings


54.4

57.9

39.7

Translation reserve


24.3

20.5

29.0

TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT


179.3

178.0

168.7

 

The Interim Financial Information presented in this Interim Report was approved by the Board of Directors on 1st August 2017.    

 

 

 

SDL plc

Interim Condensed Consolidated Statement of Changes in Equity

 


Share

Capital

Share

Premium

Retained

Earnings

Translation Reserve

Total


£m

£m

£m

£m

£m

At 31 December 2015

(audited)

0.8

98.5

59.6

8.0

166.9

Profit for the period

-

-

0.5

-

0.5

Other comprehensive income

-

-

-

12.5

12.5

Total comprehensive income

-

-

0.5

12.5

13.0

Dividend Paid

-

-

(2.5)

-

(2.5)

Arising on share issues*

-

0.3

-

-

0.3

Share-based payments*

-

-

0.3

-

0.3

At 30 June 2016

(unaudited)

0.8

98.8

57.9

20.5

178.0







Loss for the period

-

-

(18.7)

-

(18.7)

Other comprehensive income

-

-

-

8.5

8.5

Total comprehensive income

-

-

(18.7)

8.5

(10.2)

Deferred income taxation on share based payments*

-

-

(0.2)

-

(0.2)

Arising on share issues*

-

0.4

-

-

0.4

Share-based payments*

-

-

0.7

-

0.7

At 31 December 2016

(audited)

0.8

99.2

39.7

29.0

168.7







Profit for the period

-

-

18.6

-

18.6

Other comprehensive income

-

-

-

(4.7)

(4.7)

Total comprehensive income

-

-

18.6

(4.7)

13.9

Dividend paid

-

-

(5.1)

-

(5.1)

Deferred income taxation on share based payments*

-

-

0.4

-

0.4

Arising on share issues*

-

0.6

-

-

0.6

Share-based payments*

-

-

0.8

-

0.8

At 30 June 2017

(unaudited)

0.8

99.8

54.4

24.3

179.3

 

*These amounts relate to transactions with owners of the Company recognised directly in equity.

The amounts above are attributable to the equity of the parent Company.

 

 

 

SDL plc

Interim Condensed Consolidated Statement of Cash Flows

 


Unaudited

6 months to

30 June

2017

£m

Unaudited

6 months to

30 June

2016

£m




Profit for the period

18.6

0.5

Tax expense

2.0

0.4

 

Profit before tax

20.6

0.9

 

Depreciation of property, plant and equipment

1.5

1.8

Amortisation of intangible assets

2.3

2.7

Share-based payments

0.8

0.3

Gain on disposal

(20.6)

-

Decrease in trade and other receivables

4.5

0.3

(Decrease) / increase in trade and other payables and provisions

(13.6)

1.5

Exchange differences

 

(1.6)

 

(1.1)

 

 

CASH (ABSORBED BY) / GENERATED FROM OPERATIONS

(6.1)

6.4

Cash generated from continuing operations before one-off items

1.6

14.4

Cash absorbed by discontinued operations

(3.7)

(2.1)

Cash outflows from one off items

(4.0)

(5.9)

CASH (ABSORBED BY) / GENERATED FROM OPERATIONS

(6.1)

6.4







Income tax paid

(1.2)

(4.2)




NET CASH FLOWS (ABSORBED BY) / GENERATED FROM OPERATING ACTIVITIES

(7.3)

2.2




CASH FLOWS FROM INVESTING ACTIVITIES



Payments to acquire property, plant and equipment

(5.4)

(1.0)

Receipt from disposal of subsidiaries

22.3

-

NET CASH FLOWS USED IN INVESTING ACTIVITIES

16.9

(1.0)

 

 

 

SDL plc

Interim Condensed Consolidated Statement of Cash Flows (continued)

 



Unaudited

6 months to

30 June

2017

£m

Unaudited

6 months to

30 June

2016

£m

FINANCING ACTIVITIES




Net proceeds from issue of ordinary share capital


0.6

0.3

Proceeds from borrowings


-

1.9

Repayment of borrowings


-

(4.8)

Dividend paid on ordinary shares


(5.1)

(2.5)

Repayment of finance leases


-

(0.2)

NET CASH FLOWS USED IN FINANCING ACTIVITIES


(4.5)

(5.3)

INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS


5.1

(4.1)





MOVEMENT IN CASH AND CASH EQUIVALENTS




Cash and cash equivalents at start of the period


21.3

17.2

Increase / (decrease) in cash and cash equivalents


5.1

(4.1)

Effect of exchange rates on cash and cash equivalents


(0.3)

2.1





Cash and cash equivalents at end of the period


26.1

15.2

 

 

The Group has elected to present a statement of cash flows that analyses all cash flows in total. Amounts related to discontinued operations are disclosed in Note 4.

 

 

Analysis of cash and cash equivalents at end of the period

 


Unaudited

6 months to

30 June

2017

£m

Unaudited

6 months to

30 June

2016

£m





Continuing operations


26.1

15.1





Assets held for sale


-

0.1





Total


26.1

15.2

 

 

 

SDL plc

Notes to the Interim Condensed Consolidated Financial Statements

 

 

1. Basis of preparation and accounting policies

 

Basis of preparation

The annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. The interim condensed consolidated financial statements for the six months ended 30 June 2017 have been prepared on a going concern basis in accordance with IAS 34 Interim Financial Reporting.

 

As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, this condensed set of interim financial statements has been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2016.

 

The preparation of condensed consolidated interim financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results for which form the basis of making the judgements about carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.

 

The principal risks and uncertainties were disclosed in the Group's annual report and financial statements for the year ended 31 December 2016 and remain broadly unchanged. SDL has an established process both to manage risk and to seek to mitigate the impact of risk as much as possible should it materialise. Operational risks include management succession, system interruption and business continuity, data protection, compliance, contract management, integration of acquisitions, maintaining technology leadership and intellectual property. Financial risks include liquidity, counterparties, interest rates and financial reporting.

 

Going Concern

In line with code requirements the Directors have made enquiries concerning the ability of the business to continue as a going concern. Enquiries included a review of performance over the next 12 months from the date of signing this report, 2017 annual plans, a review of working capital including the liquidity position and a review of current indebtedness levels. The Directors confirm they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  Given this expectation they have continued to adopt the going concern basis in preparing the interim financial statements.

 

 

2. Segment information

 

The Group operates in the global content management and language translation software and services industry. For management reporting purposes, the Group is organised into business units based on the nature of their products and services.  The Group has four reportable operating segments as follows: 

 

·      The Language Services segment is the provision of a translation service for customers' multilingual content in multiple languages.  

·      The Language Technologies segment is the sale of enterprise, desktop and statistical machine translation technologies together with associated consultancy and services.

·      The Global Content Technologies segment is content management and knowledge management technologies together with associated consultancy services.

·      The Non-Core Businesses segment includes the sale of campaign management, social media monitoring and marketing analytic and Fredhopper technologies together with associated consultancy and services.

 

The Chief Operating Decision Maker monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment prior to charges for tax and amortisation.

 

 

Six months ended 30 June 2017 (unaudited)


Depreciation

Segment

profit/(loss)

before taxation, amortisation and one-offs


£m

£m

Continuing segments



Language Services

1.2

5.4

Language Technologies

0.2

0.7

Global Content Technologies

26.8

0.1

1.9

Total continuing segments

139.1

1.5

8.0

Discontinued Operations

2.0

-

(3.1)

Total

141.1

1.5

4.9

Amortisation, one-offs & profit on disposal



15.7

Profit before taxation


20.6

 

 

Six months ended 30 June 2016 (unaudited)

 


External

revenue

Depreciation

Segment

profit/(loss) before taxation,

amortisation and one-offs


£m

£m

£m

Continuing segments




Language Services

74.9

0.8

8.8

Language Technologies

19.4

0.5

0.5

Global Content Technologies

26.1

0.3

2.3

Total continuing segments

120.4

1.6

11.6

Discontinued Operations

13.3

0.2

(2.1)

Total

133.7

1.8

9.5

Amortisation & one-offs



(8.6)

Profit before taxation



0.9

 

 

Revenue by geographical destination was as follows:

 


Unaudited

6 months to

30 June

2017

£m

Unaudited

6 months to

30 June

2016

£m




United Kingdom

16.3

16.6

Rest of Europe

35.9

34.4

USA

58.7

49.5

Canada

6.2

6.5

Rest of the World

22.0

13.4

Discontinued operations

2.0

13.3


141.1

133.7

 

 

3. Operating profit

 


Unaudited 6 months to 30 June 2017

Unaudited 6 months to 30 June 2016


Continuing

Discontinued

Total

Continuing

Discontinued

Total


£m

£m

£m

£m

£m

£m

Is stated after charging / (crediting):














Research and development expenditure

15.9

1.1

17.0

12.5

3.6

16.1

Bad debt (credit) / charge

(0.5)

-

(0.5)

0.1

-

0.1

Depreciation of owned assets

1.5

-

1.5

1.6

0.2

1.8

Amortisation of intangibles

2.3

-

2.3

2.6

0.1

2.7

Operating lease rentals for plant and machinery

0.1

-

0.1

0.1

-

0.1

Operating lease rentals for land and buildings

3.4

-

3.4

3.0

0.4

3.4

Net foreign exchange differences

(0.1)

-

(0.1)

(0.5)

-

(0.5)

Share based payment charge

0.9

-

0.9

0.8

-

0.8

 

 

One-off costs

 


Unaudited 6 months to 30 June 2017

Unaudited 6 months to 30 June 2016


Continuing

Discontinued

Total

Continuing

Discontinued

Total


£m

£m

£m

£m

£m

£m

Redundancy and other staff costs

-

0.8

0.8

1.7

1.4

3.1

Other one-off items

-

1.8

1.8

2.4

0.4

2.8

Total one-off items

-

2.6

2.6

4.1

1.8

5.9

 

One-off items relate to a number of non-recurring items.

 

Current period one-off items relate to professional fees and onerous lease charges associated with the disposals of the non core businesses (£1.8 million) and redundancy costs associated with employees that did not transfer with the non core businesses (£0.8 million).

 

Prior period one-off items relate to the Group's restructuring last year, following the operational review carried out in January 2016.  These actions led to non-recurring redundancy costs of £2.2 million being incurred in the period.  The Group retained key employees during this time of significant change within the organisation and hence retention packages were provided to certain individuals (£0.9 million). Other one-off items related to professional and related fees associated with the Group's strategic review, corporate reorganisations carried out in 2016 and non-recurring indirect tax liabilities. 

 

These have been separately disclosed in the income statement to provide a better guide to underlying business performance.

 

 

4. Discontinued operations

 

The board decided to sell the Non-Core Businesses early in January 2016, following a strategic decision to place greater focus on the Group's key competencies, being Language Services, Language Technologies and Global Content Technologies. In accordance with IFRS 5 'Non-current assets held for sale and discontinued operations', the disposal group was classified as discontinued and their results disclosed as such in the interim financial statements.

 

The Group has now completed the disposal of these businesses with the disposal of the Fredhopper business in March 2017 and the disposal of the Social business in May 2017.  The Group received cash proceeds of £22.3 million and generated a profit on sale of £20.6 million.

 




£m





Goodwill



3.8

Current assets



2.8

Current liabilities



(4.9)

Net assets disposed



1.7

Cash proceeds



22.3

Gain on sale



20.6





 

 

A.    Cash flows from/(used in) discontinued operation

 


Unaudited

6 months to

30 June

2017

£m

Unaudited

6 months to

30 June

2016

£m




Net cash absorbed from operating activities

(3.7)

(2.1)

Net cash generated from investing activities

22.3

-

Net cash flows for the period

18.6

(2.1)

 

 

5. Taxation

 



Unaudited

6 months to

30 June

2017

£m

Unaudited

6 months to

30 June

2016

£m

Total current taxation


2.0

0.4

 

 

Deferred taxation:


Unaudited

6 months to

30 June

2017

£m

Unaudited

6 months to

30 June

2016

£m

Origination and reversal of timing differences


-

-

Total deferred taxation


-

-

Tax expense


2.0

0.4

 

A tax credit in respect of foreign currency translation differences on foreign currency loans to foreign subsidiaries of £0.2 million was recognised in the statement of other comprehensive income in the six months to June 2017 (June 2016: £0.4 million charge).

 

A tax credit in respect of share based compensation for deferred taxation of £0.4 million (June 2016: £nil) has been recognised in the statement of changes in equity in the period.

 

 

6. Earnings per share



Unaudited

6 months to

30 June 2017

£m

Unaudited

6 months to

30 June 2016

£m

Profit for the period attributable to equity holders of the parent


18.6

0.5

 

 


 

 

Number

 

 

Number

Basic weighted average number of shares (million)


81.7

81.3

Employee share options and shares to be issued (million)


1.2

0.8

Diluted weighted average number of shares (million)


82.9

82.1





 

 

Adjusted earnings per share:

 



Unaudited 6 month to 30 June 2017

Unaudited 6 month to 30 June 2016


Continuing

Discontinued

Total

Continuing

Discontinued

Total


£m

£m

£m

£m

£m

£m








Profit/(loss) for the period attributable to equity holders of the parent

3.9

14.7

18.6

4.5

(4.0)

0.5

 

Adjustments







 

Profit on disposal of non-core business

-

(20.6)

(20.6)

-

-

-

 

Amortisation of intangible fixed assets

2.3

-

2.3

2.6

0.1

2.7

 

One-off costs

-

2.6

2.6

4.1

1.8

5.9

 

Tax cost associated with profit on disposal of non core business

-

0.2

0.2

-

-

-

 

Deferred tax benefit associated with amortisation of intangible fixed assets

(0.5)

-

(0.5)

(0.5)

-

(0.5)

 

Tax benefit associated with one-off items

-

-

-

(0.8)

(0.3)

(1.1)

Adjusted profit for the period attributable to equity holders of the parent

5.7

(3.1)

2.6

9.9

(2.4)

7.5

 

 

Adjusted earnings per share is shown as the Directors believe that profit before amortisation and one-off items is reflective of the underlying performance of the business.

 

 


Unaudited 6 month to 30 June 2017

Unaudited 6 month to 30 June 2016


Continuing

Discontinued

Total

Continuing

Discontinued

Total


Pence

Pence

Pence

Pence

Pence

Pence








Adjusted earnings per ordinary share - basic (pence)

6.95

(3.76)

3.19

12.10

(2.99)

9.11








Adjusted earnings per ordinary share - diluted (pence)

6.85

(3.76)

3.15

11.98

(2.99)

9.02

 

 

7. Dividend per share

 

Dividends paid in the six months ending 30 June 2017 were £5.1 million (June 2016: £2.5 million). The dividend paid in 2017 amounted to 6.2 pence per share.

 

 

8. Interest-bearing loans

 

The Group had a £25 million committed facility with HSBC Bank Plc.  The Group also has a £25 million uncommitted accordion facility with HSBC Bank Plc.  These facilities expire on 2 August 2020.

 

 

9. Share-based compensation grants

 

On 18 April 2017, 1,006,455 Long Term Incentive Plan (LTIP) shares were awarded to certain key senior executives and employees of the SDL Group.

 

 

10. General notes

 

The comparative figures for the financial year ended 31 December 2016 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor and delivered to the registrar of companies. The report of the auditor was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

 

11. Events after the statement of financial position date

 

There are no known events occurring after the statement of financial position date that require disclosure.

 

 

 

Appendix

 

Key performance indicators

 

The Board reviews a number of key performance indicators (KPIs) to monitor and assess performance on an on-going basis.  These KPIs include:

 

·      Revenue growth

·      Gross margin

·      Adjusted EBITA and margin, and

·      Cash absorbed by operations

 

The Group's performance against these KPIs in the current and prior year are included within this interim statement. The Board believes that monitoring Adjusted PBITA and margin is the most appropriate profit measure to review because it is the most meaningful indicator of medium and long term business performance.  Specifically, this profit measure excludes the impact of:

 

·      one-off costs incurred over the past two years associated with the reorganisation of the Group; these costs are not expected to recur and these are explained in more detail below

·      amortisation, a non-cash charge based on acquisition decisions taken a number of years ago, which has no impact on future performance and business valuation, and

·      profits or losses arising on the sale of Non-Core businesses which, whilst material, do not reflect the future operating potential of the business.

 

In addition to these core metrics, the Group monitors and reports a number of additional KPIs to measure whether it is successfully executing its new strategy. These additional KPIs are defined as follows:

 

·      Technology Annual Recurring Revenue (ARR): Annual Recurring Revenue is annualised revenue from existing contracts which includes term, SaaS and support and maintenance revenue streams. Annual Recurring Revenue current and prior year amounts are all translated at 30 June 2017 foreign exchange rates

·      Language Services Repeat Revenue Rate (RRR): Language Services Repeat Revenue Rate is calculated as current year revenue earned from prior year customers as a percentage of current year revenue; the difference between RRR and total revenue is current year revenue from new customers

·      Premium revenue: revenue arising from the sale of premium content such as Life Sciences and Transcreation; the difference between total Language Services revenue and premium revenue is non premium revenue

·      Upsell deals: number of further sales of existing products to existing customers

·      Cross-sell deals: number of sales of new products to existing customers

·      Wins in Life Sciences, Machine Translation, Marketing Solutions: the number of new Life Science Machine, Machine Translation, Marketing Solutions customer wins achieved in the year respectively

·      Linguistic utilisation: the percentage of time in house linguists are translating content and not performing other tasks such as administration of files.

 

The revenue basis for RRR and premium revenue is calculated in line with Generally Accepted Accounting Principles ("GAAP"). The remaining strategic KPIs set out above have no direct reference to any GAAP measure and hence cannot be reconciled to the Group's financial statements. ARR is an annualised measure of contracts at a point in time and hence cannot be reconciled into revenue recognised during the year.

 

Constant currency growth rates are based on prior year balances restated based on 2017 foreign exchange rates. The prior year constant currency amount is restated by retranslating prior year monthly results from foreign operations at their respective 2017 monthly foreign exchange rates. The Board has chosen to disclose these comparative growth rates as the impact of currency in the period has been material to disclosed revenue growth rates. The difference between the reported and constant currency amounts and growth rates is the impact of foreign exchange.

 

 

Responsibility Statement

 

We confirm that to the best of our knowledge:

 

·      the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU;

 

·      the interim management report includes a fair review of the information required by:

 

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

 

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

 

For and on behalf of the Board

 

 

 

Adolfo Hernandez

Chief Executive Officer

 

1st August 2017

 

 

 

INDEPENDENT REVIEW REPORT TO SDL PLC

 

Conclusion 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which is comprised of the Interim Condensed Consolidated Income Statement, Interim Condensed Consolidated Statement of Comprehensive Income, Interim Condensed Consolidated Statement of Financial Position, Interim Condensed Consolidated Statement of Changes in Equity, Interim Condensed Consolidated Statement of Cash Flows and the related explanatory notes. 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").   

Scope of review 

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK.  A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.  We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. 

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit.  Accordingly, we do not express an audit opinion. 

Directors' responsibilities 

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA. 

The annual financial statements of the group are prepared in accordance with International Financial Reporting Standards as adopted by the EU.  The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU

Our responsibility 

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. 

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose.  To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. 

 

 

 

Simon Haydn-Jones

 

For and on behalf of KPMG LLP 

 

Chartered Accountants 

Arlington Business Park

Reading

RG7 4SD

 

1 August 2017

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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SDL plc specializes in language translation technology, services and content management. The Company operates through four segments: Language Services, which is engaged in the provision of a translation service for customer's multilingual content in multiple languages; Language Technology, which includes the sale of enterprise, desktop and statistical machine translation technologies together with associated consultancy and services; Global Content Technologies, which is content management and knowledge management technologies together with associated consultancy services, and Non-Core Businesses, which includes the sale of campaign management, social media monitoring and marketing analytic. The Company offers a range of services, including translation, post-editing, transcreation, interpretation, document localization, software localization, Website localization, multimedia localization and product testing. more »

LSE Price
474.84p
Change
0.8%
Mkt Cap (£m)
387.2
P/E (fwd)
18.6
Yield (fwd)
1.5


 
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