SDL plc Half Year Results for the Six Months Ended 30 June 2020

SDL plc (“SDL” or the “Group”), the intelligent language and content company, today announces its half year results for the six months ended 30 June 2020.

Financial Highlights

Unaudited Results

1H20

1H19

Change

Change at

constant

currency

Six months to 30 June

£m

£m

 

 

 

 

 

 

 

Revenue

180.7

182.5

(1%)

(2%)

 

 

 

 

 

Operating profit

13.4

11.9

+13%

+3%

 

 

 

 

 

Adjusted operating profit1

16.3

16.1

+1%

(6%)

 

 

 

 

 

Profit before tax

11.7

10.9

+7%

(1%)

 

 

 

 

 

Basic earnings per share

11.2p

8.9p

+26%

 

 

 

 

 

 

Diluted earnings per share

11.1p

8.7p

+28%

 

 

 

 

 

 

Adjusted diluted earnings per share2

11.7p

12.3p

(5%)

 

1 Adjusted operating profit: Operating profit before amortisation of acquired intangibles and exceptional items (as reconciled on the income statement)

2 Adjusted earnings: Profit after tax before the impact of exceptional items and amortisation of acquired intangibles (as reconciled in note 7)

Highlights

  • Business continuity plans successfully executed in response to COVID-19, enabling all employees to work from home safely and remain productive. The substantial majority of employees continue to work remotely. Focus continues to be on the protection and wellbeing of employees, customers and supply chain
  • Sales mix shift as a result of COVID-19:
    • Stronger Language Services revenues in sectors such as corporate communications and Life Sciences offsetting weaker areas such as Marketing Solutions, travel, leisure, manufacturing and automotive
    • Technology sales conversion in line with expectations, with some softness in Translation Productivity offset by strong growth (46%) in Machine Translation
  • Group adjusted operating profit increased 1% to £16.3m (1H19: £16.1m)
  • Language Services revenues declined 2% but gross margin improved to 43.5% (1H19: 42.1%), reflecting the positive impact of applying a range of delivery model improvements. Excluding Marketing Solutions, which was adversely impacted by COVID-19, Language Services revenues increased by 2% from £117.4m to £120.1m
  • Language Technologies revenues on par with last year. Content Technologies revenues up 2% on the prior year, with a number of new customer wins in H1
  • On track to deliver cost reductions against budget of £8m, as referred to in the 2019 full year results. Business operations carefully managed during this challenging environment with no staff furloughed
  • Operating cash conversion of 144% (1H19: 60%), benefiting from improved cash management and timing of customer cash receipts
  • Liquidity at 30 June 2020 of £98m, £35m in cash and £63m available under revolving credit facility. Net cash currently stands at c. £45m
  • Continued strong innovation activity across the technology and solutions portfolio. Innovative “SLATE” smart translation platform launched in first half; SDL Trados Live launched post period; and launch of SDL Tridion Sites 9.5 planned for the second half of year
  • Expanded the customer key account programme and sales leadership skill-set and re-organised the global marketing function to strengthen alignment with product management and to drive SDL’s digital go-to-market strategy

Outlook

  • Customer activity increasingly stabilised in May and June, with some signs of more positive momentum beginning to build
  • SDL has a good pipeline for the second half, which traditionally is its stronger period, but with a higher degree of uncertainty than in normal years and the Group remains alert to risks to customer spending and delays to sales cycles and decision-making
  • The Board continues to assess the appropriate time to reinstate dividends after its decision to suspend them in April 2020 and will reconsider reinstatement alongside the full year results

Adolfo Hernandez, CEO of SDL plc, said:

“In challenging circumstances, we are pleased with the Group’s performance in the first half of the year. Crucially, we were able to enact our business continuity plans swiftly, moving the entire global workforce to working-from-home over a matter of weeks. As a result, there was no material disruption in our ability to service customers nor to our productivity. SDL remains operationally resilient and well-capitalised, and its core strategic plans remain on track. Looking to the second half, which is traditionally our stronger period, although our pipeline is good, COVID-19 continues to present a risk to trading patterns and software sales cycles. However, we believe that the Group is positioned to take advantage of the expected recovery in the global economy post COVID-19.”

To view the full announcement, please visit the investor relations section of our website.

About SDL

SDL (LSE:SDL) is the intelligent language and content company. Our purpose is to enable global understanding, allowing organizations to communicate with their audiences worldwide, whatever the language, channel or touchpoint. We work with over 4,500 enterprise customers including 90 of the world’s top brands and the majority of the largest companies in our target sectors. We help our customers overcome their content challenges of volume, velocity, quality, fragmentation, compliance and understanding through our unique combination of language services, language technologies and content technologies.

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