SDL plc: Final Results for the Year Ended 31 December 2018

MAIDENHEAD, England, March 20, 2019 /PRNewswire/ --

SDL plc ("SDL", "the Group" or "the Company"), a leader in global content management and language translation software and services, announces its audited results for the twelve months ended 31 December 2018. 

Financial Highlights

• Revenues up 12.6% to £323.3m (2017: £287.2m)
• Organic constant currency revenue growth of 4.5%
• Organic Language Services Gross Margin for the year of 42.5% (2017: 40.5%)
• Adjusted Operating Profit up 20.8% to £29.0m (2017: £24.0m); inclusive of £6.5m net capitalised research and development (2017: £2.5m)
• Total R&D cash spend increased from £21.0m in 2017 to £25.2m in 2018, reflecting increased investment in our product portfolio
• Acquired Donnelley Language Solutions (DLS) which contributed revenues of £27.8m and Adjusted Operating Profit of £1.8m in the period from 23 July to 31 December 2018
• Exceptional costs of £7.7m (2017: £3.0m), primarily restructuring and acquisition-related costs
• Basic Earnings Per Share (EPS) contracted 9% to 17.2p (2017: 18.9p) due to an increase in exceptional costs and the impact of the equity issue to finance the DLS acquisition
• Adjusted Basic EPS increased by 23% to 24.7p 
• Adjusted Cash Flow from Operations was £45.6m (2017: £14.2m), representing cash flow to Adjusted EBITDA conversion of 133%
• Net cash at 31 December 2018: £14.4m (2017: £22.7m), following the acquisition of DLS for $77.8m (£59.4m) and an equity raise of £35.0m, net of fees

^1. The Group has applied IFRS 15 using the fully retrospective method and as a result, the comparative information has been restated. 2017 Adjusted Operating Profit has been restated by £2.0m from £22.0m to £24.0m.

^2. Adjusted Operating Profit is Group Operating Profit from Continuing Operations, before amortisation of acquired intangibles and exceptional items

³. Adjusted Basic Earnings per share is calculated based on Adjusted Operating Profit as defined above

^4. Adjusted Operating Cash flow is statutory operating cash flow pre the cash costs of exceptional items which amounted to £6.8m in 2018 ( 2017: £10.7m)

Operational Highlights:

Substantial progress was made against our transformation plan and strategic objectives in the period:

Completion of the acquisition of DLS in July 2018, to accelerate our growth in premium, regulated industries. Integration on track and the business has performed to expectations

Premium Services revenues were £63.5m (2017: £40.1m), including Financial Services, Life Sciences, Marketing Solutions and Legal Services and equated to 29.1% of Language Services revenue (2017: 21.7%)

Continued focus on growing existing accounts: 220 cross-sell and up-sell deals were completed.

High levels of recurring or repeat revenues were maintained, with Repeat Recurring Revenue (RRR) in SDL services of 97% and Annual Recurring Contract Value (ARCV) from technology of £68.5m

Linguistic utilisation December exit rate rose to 57% (December 2017: 53%), due to the implementation of Helix, our Language Services automation programme and other productivity tools

Investment in significant technology innovations continues in Neural Machine Translation (NMT), Linguistic Artificial Intelligence (AI), Tridion DX, Trados and Language Cloud

Cost saving initiatives delivered annualised savings of c.£10m at a cost of £6.2m, of which £4.1m was incurred in 2018 and £2.1m in 2017.  Approximately £7.0m of these savings crystallised in 2018.

Commenting on the results, CEO Adolfo Hernandez said:

"I am pleased to report a solid improvement in the Group's financial performance compared to 2017, with all divisions performing well. Adjusted Operating Profit grew 21% to £29.0m and Adjusted Basic EPS grew by 23% to 24.7 pence; including a five-month contribution from DLS.  The actions we took during 2017 helped to deliver this positive outcome. Strategically, we worked at pace to transform our business through the implementation of our Language Services automation programme and investment in technology and services innovation, the benefits of which will also be seen in future periods."

Commenting on the outlook, CEO Adolfo Hernandez said:

"The enlarged SDL group is performing in line with our expectations and we look forward to another year of progress against our strategic targets and financial goals of revenue, profit and margin growth. Much of the transformational heavy-lifting has now been completed. Our key programmes for 2019 include the optimisation of the Helix automation programme; further integration of DLS, innovation in Language Cloud and Linguistic AI; building our premium services and solutions and streamlining our back-office operations. Although uncertainty remains as to the outcome of the Brexit negotiations between the UK and EU, the Group has adopted an approach that we believe will allow us to manage the risks and opportunities that Brexit brings."

To see the full press release, please visit SDL's investor relations section

About SDL PLC

SDL (LSE: SDL) is the global leader in content creation, translation and delivery. For over 27 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 90 of the top 100 global companies work with and trust us on SDL.com. Follow us on Twitter, LinkedIn and Facebook.

Cautionary statement

Certain statements in this announcement constitute, or may be deemed to constitute, forward looking statements (including beliefs or opinions). Any statement in this announcement that is not a statement of historical fact including, without limitation those regarding the Company's future expectations, operations, financial performance, financial condition and business is a forward looking statement. Such forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this announcement. As a result, you are cautioned not to place reliance on such forward looking statements. Except as is required by the Listing Rules, Disclosure and Transparency Rules and applicable laws, no undertaking is given to update the forward looking statements contained in this announcement, whether as a result of new information, future events or otherwise. Nothing in this announcement should be construed as a profit forecast. This announcement has been prepared for the Group as a whole and therefore gives greater emphasis to those matters which are significant to SDL plc and its subsidiary undertakings when viewed as a whole.

SOURCE SDL Plc

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