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SDL PLC - Postponement of results and COVID-19 update

RNS Number : 3865H
SDL PLC
24 March 2020
 

24 March 2020

SDL plc

("SDL" or the "Group")

Postponement of publication of 2019 full year results and update on COVID-19 

 

SDL plc (LSE: SDL), the global leader in content management and language translation software and services, is today making the following announcement regarding its preliminary results to 31 December 2019 and the impacts of COVID-19.

SDL announces that, at the request of the Financial Conduct Authority (FCA), to "observe a moratorium on the publication of preliminary financial statements for two weeks", the publication of its preliminary results will be postponed beyond 25 March, being the date previously announced as the date of their publication. A further announcement will be made once a revised date for publication has been determined.

As previously announced, SDL expects 2019 revenue and adjusted operating profit to be significantly ahead of 2018 and in line with market expectations. Net cash at 31 December 2019 was £26.3m and the Group has continued to generate cash since the start of the year. In addition to its net cash position, SDL has bank facilities of £120m (of which £70m committed).

 

Update on the impacts of COVID-19

Given the exceptional global public health crisis, SDL is providing the following additional update.

Business Continuity - SDL's Operational Response

SDL's Global Business Continuity Plan was activated at the end of January 2020 to support its locations in Asia and has now been rolled out across all other affected countries. This has included:

·    SDL Crisis Committee in place

·    Enabling staff to work from home, including the provisioning of contingency hardware and networking capability. Most of SDL's 4,300 staff are now working from home

·    Sales and marketing activities adapted to current market conditions

·    Regular employee, customer and supplier communications

The implementation of Helix (SDL's Business Process Automation platform), virtualised applications and storage on the cloud have enabled easier and more secure remote working. To date, there has been no degradation in SDL's delivery capability for clients.

Potential Future Impacts from Reduced Customer Activity

In the year to date, SDL has not yet seen a material change in revenue or pipeline but there are signs of slower decision-making. However, it is early days for most of SDL's customers. Therefore, although SDL has a high recurring revenue and the nature of its software products is very sticky, it is prudent to anticipate a reduction in constant currency revenues across SDL's Language Services and technology businesses. The Group has developed a phased plan to offset some of the impact of reduced revenues, depending on the severity and length of the crisis.

Phase 1 of this plan is being executed now. This will reduce costs (cost of sales and operating costs) by £8m in-year compared with budget, through a combination of cost controls, such as the prioritisation of in-sourcing to reduce linguistic outsourcing costs, and cutting non-essential expenses.

Further action on costs will be taken if necessary. 

Conclusion

SDL is working diligently to assess, plan for and mitigate negative impacts from any reduction in customer activity and will continue to update the market, in line with its obligations.  In the meantime, the Group is suspending 2020 guidance.

 

Adolfo Hernandez, CEO of SDL plc, said:

"SDL's strategy remains robust and unchanged. The Group's multi-year strategic actions to deepen client relationships, innovate our services, products and solutions, and modernise our operating platform are designed to underpin long-term revenue growth and margin improvement. These actions have also put us in a strengthened position to respond effectively to the immediate change in market conditions.

"We are very pleased with the operational success of promptly moving most of the employees to work safely from home. Feedback from customers and employees is that our service levels remain high and that the investments and culture changes made over the past three years are delivering in a time of crisis. We are engaging with our customers, continue to serve them diligently, and we are paying close attention to trading developments and planning our mitigating actions. Whilst it is early days and the situation is changing rapidly, our strong balance sheet and ability to manage costs gives us a good base to deal with the uncertain times that the COVID-19 pandemic is creating."

 

Reference Information

SDL estimated revenue split by geography 2019

Geography

Estimated percentage of revenue, 2019

UK

11%

EMEA (excluding UK)

22%

USA

40%

Americas (excluding USA)

3%

Asia Pacific

24%

 

SDL estimated revenue split by industry 2019

Industry

Estimated percentage of revenue, 2019

High Tech

34%

Life Sciences

16%

Automotive/Manufacturing

14%

Financial Services

14%

Retail/Travel

11%

Government/Defence

5%

Other

6%

 

Enquiries

SDL plc

01628 410100

Adolfo Hernandez, CEO

Xenia Walters, CFO

 

 

 

Luther Pendragon

0207 618 9100

Harry Chathli, Claire Norbury, Alexis Gore

 

 

 

About SDL

SDL (LSE: SDL) the global leader in content management and language translation software and services. 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 10,000 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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Market: LSE
Market Cap: £441.88 m
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