3rd Sep 2007 07:01
SDL PLC03 September 2007 3 September 2007 SDL PLC Interim results for the six months ended 30 June 2007 Continued strong progress and significant increase in profitability SDL plc ("SDL" or "the Group"), a leader in the emerging market for GlobalInformation Management (GIM) solutions, is pleased to announce its unauditedinterim results for the six months ended 30 June 2007. Unaudited Unaudited 6 months 6 months to 30 June to 30 June 2007 2006 % £'000 £'000 Change Income Statement:Revenue 54,478 45,566 +20% Earnings before interest, taxation, depreciationand amortisation of intangibles (EBITDA) 9,482 6,163 +54%Profit before tax and amortisation of intangibles 8,714 5,070 +72%Profit before tax 7,178 3,627 +98% Earnings per ordinary share - basic (pence) 7.70 3.32 +132%Adjusted earnings per ordinary share - basic (pence) 10.04 5.65 +78% Balance Sheet:Total equity 101,771 51,609Cash and cash equivalents 15,965 6,157Interest bearing loans and borrowings (11,552) (16,605) Highlights: • Results ahead of market expectations • Gross Margin up 2% points to 52% compared to the first half of 2006 • Tridion contribution of revenue of £3.8m and £1.8m of profit before tax • Successful integration of Tridion with encouraging early signs of cross-selling opportunities • Strengthening of product set with acquisition of Passolo for €2m • Strong market penetration: SDL supplies technology and/or services to the world's top 10 brands • Significant new business wins including Intel, Phillips and Greater London Authority Commenting on the interim results Mark Lancaster, Chairman and Chief Executiveof SDL, said: "We are pleased to announce a strong performance for the half year, ahead ofmarket expectations. We continue to see solid organic growth driven by theincreased adoption of our technology and a growing awareness of our solutions.In addition, the acquisition of Tridion, a leading web content managementsoftware company, has integrated well into SDL, contributing to the growth inthe period. "Looking ahead, we remain confident in our prospects for the full year.Overall, we are encouraged by the progress achieved to date and anticipate tosee continued growing interest in Global Information Management Solutions. Webelieve that our newly acquired web content management capability combined withSDL's Translation Management System, make for a compelling proposition toaddress the complex requirements of an evolving market place. We anticipate thatthis combined offering will deliver continued growth in the longer term." For further information please contact: SDL plc Tel: 01628 410 127Mark Lancaster, Chief Executive Financial Dynamics Tel: 020 7831 3113Edward Bridges/Juliet Clarke/Haya Chelhot Background information SDL is the leader in Global Information Management (GIM) solutions that empowerorganizations to accelerate the delivery of high-quality multilingual content toglobal markets. Its enterprise software and services integrate with existingbusiness systems to manage the delivery of global information from authoring topublication and throughout the distributed translation supply chain. Global industry leaders rely on SDL to provide enterprise software or hostedservices for their GIM processes, including ABN-Amro, Best Western, Bosch,Canon, Chrysler, CNH, Hewlett-Packard, Microsoft, Philips, SAP, Sony, SUNMicrosystems and Virgin Atlantic. SDL has implemented more than 400 enterpriseGIM solutions, has deployed over 150,000 software licenses across the GIMecosystem and provides access to on-demand translation portals for 10 millioncustomers per month. Over 1,000 service professionals deliver consulting,implementation and language services through its global infrastructure of morethan 50 offices in 30 countries. For more information, visit www.sdl.com Chairman's Statement Summary Performance The first half of 2007 saw SDL achieve record revenue and operating profit,ahead of market expectations. Revenues were up 20% at £54.5 million (H1 2006:£45.6 million) with 11% of this revenue growth being organic and the balancecontributed by the acquisition of Tridion. Profit before tax and amortisation ofintangible assets has increased by 72% to £8.7 million (H1 2006: £5.1 million)with £1.8m being contributed from Tridion end of quarter licence revenue, givinga 36% increase in organic profit. Integration of Tridion Tridion, a leading web content management software company, has integrated wellinto the SDL group. We are pleased to have released Tridion's Web ContentManagement System with SDL Translation Management system tightly integrated,allowing businesses to truly create and deliver global web content across theirenterprise. While a number of the customers are common to both businesses, themajority do not overlap, which will allow us to leverage our solutions into thecombined customer base of the businesses. We are starting to see the benefits ofthe combined entity, with Tridion already starting to expand its footprint intoAsia and the west coast of America, utilising SDL's existing infrastructure tospeed up this process and reduce the costs of expansion. We anticipate a numberof the second half deals for 2007 to be joint Global Information Managementsolutions with Tridion and SDL technology. Our Technology The combined installations of SDL's enterprise Global Information ManagementSolutions, including web content management, translation management systems andterminology management, are now getting close to the 600 mark, most of thesebeing from blue chip customers such as Intel, FedEx, Canon, ABN Amro, VirginAtlantic, John Deere and Philips. We are seeing an increasing number of theworld's leading brands across all sectors use SDL Global Information Managementtechnology in some form, confirming not only that awareness of our solutions isgrowing, but also the value they add to the leading global businesses. Services Infrastructure The Services side of the Group has continued to grow. Our Knowledge-basedTranslation solution ("SDL KbTS") is transforming the landscape of translation,speeding up time to market and reducing costs. We are continuing to seesignificant momentum in the KbTS category with a 200% increase in the volume ofwords being translated over the equivalent period in 2006. We have also addedsome significant business process outsourcing clients to the SDL portfolio suchas Linde, Burger King and Research in Motion. SDL now has arguably the mostintegrated and extensive local language office network in the industry, with aglobal infrastructure of language production offices situated in more than 30countries. All of these offices are fully integrated with each other via SDL'sGlobal Information Management Technology, driving internal operationalefficiencies and bringing scalability to our services offering. Vision and strategy for SDL The vision of SDL is to help the world's leading brands to deliver a consistentmessage globally and also to accelerate time to market by providing the softwareand services to deliver all corporate information into different languages. Oursolutions are becoming increasingly recognised for web globalisation and brandmanagement through to technical support (for lowering the overall cost ofdelivering global support) as well as the traditional functions such aslocalisation of technical documentation. In order to provide comprehensiveGlobal Information Management, the complete supply chain of those involved inthe creation and maintenance of global content must be included in the solution.SDL's technology provides increased integration across this supply chainenabling new line-of-business functions to leverage the global supply chain moreefficiently. The integration of the Tridion content management system into theSDL technology portfolio provides SDL with the technology basis to takeadvantage of the growing acceptance amongst global corporations of usingweb-based technologies to drive growth initiatives around sales, marketing andsupport. Outlook Looking ahead, we remain confident in our prospects for the full year. Thetechnology divisions are expected to increase their revenue contribution secondhalf to first half, primarily due to Global Information Management tractioncombined with the additional full half year from the Tridion acquisition. Thelocalisation services division will slightly decrease their revenue contributionsecond half to first half, primarily due to seasonal projects, but also due tothe dollar weakness; the predominant services revenue being derived from NorthAmerica. We anticipate the market conditions to remain similar to those of thefirst half, however with increasing interest in Global Information Managementsolutions we expect to see continued revenue traction on the technology side ofthe business. Looking forward to 2008, we anticipate further consolidation in both the contentmanagement and translation services spaces. We expect to see continued growth inglobal trading and increased awareness of the need to create and manage contentfor global markets, a great deal of this being driven from the need to have aglobal web presence. We consider the acquisition of the Tridion web contentmanagement system coupled with SDL's Translation Management System to be a keysolution for the evolving global market that will deliver continued growth inthe longer term. Mark LancasterChairman and CEOSDL plc31 August 2007 *see: http://www.sdl.com/company/press-releases-sdl/press-release-sdl.htm?id=66 Interim Condensed Consolidated Income Statement Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 30 June 31 December Notes 2007 2006 2006 £'000 £'000 £'000Continuing Operations Sale of goods 7,370 5,351 10,190Rendering of services 47,108 40,215 84,521REVENUE (3) 54,478 45,566 94,711 Cost of sales (26,368) (22,999) (47,947)GROSS PROFIT 28,110 22,567 46,764 Administrative expenses (19,273) (16,951) (33,610)OPERATING PROFIT BEFORE AMORTISATION OF INTANGIBLE ASSETS 8,837 5,616 13,154Amortisation of intangible assets (1,536) (1,443) (2,865) OPERATING PROFIT (4) 7,301 4,173 10,289Finance costs (367) (640) (1,143)Finance revenue 244 94 230PROFIT BEFORE TAX 7,178 3,627 9,376 UK tax expense (5) (355) (453) (691)Foreign tax expense (5) (1,784) (1,117) (2,522) Tax expense (5) (2,139) (1,570) (3,213) PROFIT FOR THE PERIOD ATTRIBUTABLETO EQUITY HOLDERS OF THE PARENT 5,039 2,057 6,163 Pence Pence PenceEarnings per ordinary share - basic (pence) (6) 7.70 3.32 9.91Earnings per ordinary share - diluted (pence) (6) 7.42 3.23 9.53Adjusted earnings per ordinary share - basic(pence) (6) 10.04 5.65 14.52Adjusted earnings per ordinary share - diluted(pence) (6) 9.68 5.51 13.97 Interim Condensed Consolidated Balance Sheet Unaudited Unaudited Audited 30 June 30 June 31 December Notes 2007 2006 2006 £'000 £'000 £'000ASSETSNON CURRENT ASSETSProperty, plant and equipment 3,362 2,985 3,104Intangible assets 99,816 61,610 58,381Deferred income tax 6,219 1,484 2,005Rent deposits 293 442 313 109,690 66,521 63,803CURRENT ASSETSTrade and other receivables 29,976 19,979 20,739Financial Assets 169 169 474Cash and cash equivalents 15,965 6,157 7,978 46,110 26,305 29,191TOTAL ASSETS 155,800 92,826 92,994 LIABILITIESCURRENT LIABILITIESTrade and other payables (27,970) (17,002) (18,700)Interest bearing loans and borrowings (7) (2,000) (2,000) (2,000)Current tax liabilities (5,264) (4,013) (4,361)Provisions (86) (305) (125) (35,320) (23,320) (25,186)NON CURRENT LIABILITIESInterest bearing loans and borrowings (7) (9,552) (14,605) (9,656)Other payables (243) (374) (280)Deferred tax (8,312) (2,540) (2,981)Provisions (602) (378) (385) (18,709) (17,897) (13,302)TOTAL LIABILITIES (54,029) (41,217) (38,488)NET ASSETS 101,771 51,609 54,506EQUITYShare capital 744 623 625Share premium 91,687 50,953 51,096Shares to be issued 541 66 66Retained earnings 11,244 (731) 4,334Foreign exchange differences (2,445) 698 (1,615)TOTAL EQUITY ATTRIBUTABLE TOEQUITY HOLDERS OF THE PARENT 101,771 51,609 54,506 The Interim Financial Information presented in this Interim Report was approvedby the Board of Directors on 31 August 2007. Interim Condensed Consolidated Statement of Changes in Equity Shares Foreign Share Share to be Retained Exchange Capital Premium Issued Earnings Differences Total £'000 £'000 £'000 £'000 £'000 £'000At 31 December 2005(audited) 615 50,629 238 (2,893) 1,005 49,594Currency translation differences onforeign currency intangibles andnet investments - - - - 121 121Currency translation differenceson foreign currency equity loansto foreign subsidiaries - - - - (428) (428)Deferred taxation on sharebased payments - - - (156) - (156)Tax credit for share options - - - 111 - 111Total income and expense for theperiod recognised directly in equity - - - (45) (307) (352)Net profit for the period - - - 2,057 - 2,057Total income and expense forthe period - - - 2,012 (307) 1,705Arising on share options 4 156 - - - 160Arising on acquisition of Lomac 3 103 (106) - - -Arising on acquisition of LinguaFranca 1 65 (66) - - -Share-based payments - - - 150 - 150At 30 June 2006 (unaudited) 623 50,953 66 (731) 698 51,609 Shares Foreign Share Share to be Retained Exchange Capital Premium Issued Earnings Differences Total £'000 £'000 £'000 £'000 £'000 £'000Currency translation differenceson foreign currency intangiblesand net investments - - - - (1,606) (1,606)Currency translation differenceson foreign currency equity loansto foreign subsidiaries - - - - (707) (707)Deferred taxation on sharebased payments - - - 335 - 335Tax credit for share options - - - 172 - 172Total income and expense for theperiod recognised directly in equity - - - 507 (2,313) (1,806)Net profit for the period - - - 4,106 - 4,106Total income and expense forthe period - - - 4,613 (2,313) 2,300Arising on share options 2 143 - - - 145Share-based payments - - - 452 - 452At 31 December 2006(audited) 625 51,096 66 4,334 (1,615) 54,506 Interim Condensed Consolidated Statement of Changes in Equity Shares Foreign Share Share to be Retained Exchange Capital Premium Issued Earnings Differences Total £'000 £'000 £'000 £'000 £'000 £'000Currency translation differenceson foreign currency intangiblesand net investments - - - - (894) (894)Currency translation differenceson foreign currency equity loansto foreign subsidiaries - - - - 64 64Deferred taxation on sharebased payments - - - 1,314 - 1,314Tax credit for share options - - - 192 - 192Total income and expense for theperiod recognised directly in equity - - - 1,506 (830) 676Net profit for the period - - - 5,039 - 5,039Total income and expense forthe period - - - 6,545 (830) 5,715Arising on share options 5 475 - - - 480Arising on acquisition of LinguaFranca 1 65 (66) - - -Arising on acquisition of Tridion 113 39,916 - - - 40,029Arising on acquisition of Passolo - 135 541 - - 676Share-based payments - - - 365 - 365At 30 June 2007(unaudited) 744 91,687 541 11,244 (2,445) 101,771 These amounts are attributable to equity holders of the parent company. Interim Condensed Consolidated Cash Flow Statement Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Profit before tax 7,178 3,627 9,376 Depreciation of property, plant and equipment 645 547 1,272Amortisation of intangible assets 1,536 1,443 2,865Finance costs 367 640 1,143Finance revenue (244) (94) (230)Share-based payments 365 150 602Gain on disposal of property, plant and equipment - - (7)Increase in debtors (4,324) (1,610) (1,825)(Decrease)/increase in current liabilities and Provisions (664) (1,165) 215Exchange differences (175) 4 (1,032)Income tax paid (539) (1,202) (2,515) NET CASH FLOWS GENERATED FROMOPERATING ACTIVITIES 4,145 2,340 9,864 CASH FLOWS FROM INVESTING ACTIVITIESPayments to acquire property, plant and equipment (693) (486) (1,433)Receipts from sale of property, plant and equipment 1 - 49Purchase of Trados Inc - (76) -Purchase of Tridion Holding BV (47,139) - -Purchase of PASS Process Automation Software Systems Engineering GmbH (608) - -Net cash acquired with subsidiaries 11,813 - -Interest received 244 94 230NET CASH FLOWS USED IN INVESTINGACTIVITIES (36,382) (468) (1,154) FINANCING ACTIVITIESNet proceeds from issue of ordinary sharecapital 40,644 160 305Repayment of interest bearing loans and borrowings (1,000) (2,162) (6,596)Proceeds from new loans 1,023 - -Interest paid (367) (640) (1,143)NET CASH FLOWS GENERATED FROMFINANCING ACTIVITIES 40,300 (2,642) (7,434)INCREASE/(DECREASE) IN CASH ANDCASH EQUIVALENTS 8,063 (770) 1,276 MOVEMENT IN CASH AND CASH EQUIVALENTSCash and cash equivalents at start of the period 7,978 6,976 6,976Increase/(decrease) in cash and cash equivalents 8,063 (770) 1,276Effect of exchange rates on cash and cashequivalents (76) (49) (274) Net cash and cash equivalents at end of the period 15,965 6,157 7,978 Notes to the Interim Condensed Consolidated Financial Statements 1. Basis of preparation and accounting policies Basis of preparation The interim condensed consolidated financial statements for the six months ended30 June 2007 have been prepared in accordance with IAS 34 Interim FinancialReporting. The interim condensed consolidated financial statements do not include all theinformation and disclosures required in the annual financial statements, andshould be read in conjunction with the Group's annual financial statements as at31 December 2006. Significant accounting policies The accounting policies adopted in the preparation of the interim condensedconsolidated financial statements are consistent with those followed inpreparation of the Group's annual financial statements for the year ended 31December 2006. 2. Business Combinations Acquisition of Tridion Holding BV On 18 May 2007 the Group acquired 100% of the share capital of Tridion HoldingBV, a company based in The Netherlands. The total cost of the combination comprised €69 million (£49 million) and wasfunded through both the placing and open offer of 11.3m shares on the LondonStock Exchange, raising £40m net of expenses, and from the Group's existing cashresources. The provisional fair value of the identifiable assets and liabilities of TridionHolding BV as at the date of acquisition were: Provisional fair value Book value to Group £'000 £'000 Intangible assets - 17,727Property, plant and equipment 140 140Cash and cash equivalents 11,491 11,491Trade receivables 3,780 3,746Other receivables 1,443 1,443Trade payables (1,114) (1,114)Other payables (6,335) (6,369) Deferred tax assets - 2,900Deferred tax liabilities - (5,318)Net assets 9,405 24,646Provisional Goodwill arising on acquisition 24,562 49,208 All fair values included in the above analysis are provisional fair values whichare based upon management's best estimate at the date of preparation of thefinancial statements. The fair values are only provisional due to the proximityof the acquisition to the date of the reporting period. Discharged by: £'000 Costs associated with the acquisition 2,069Cash paid 47,139Total 49,208 Cash outflow on the acquisition:Net cash and cash equivalents acquiredwith the subsidiary 11,491Cash paid (47,139)Net cash outflow (35,648) From the date of acquisition Tridion Holding BV has contributed £3,800,000 ofrevenue and £1,800,000 to the net profit before tax of the Group. If thecombination had taken place at the beginning of the year, the profit before taxand amortisation of intangible assets for the Group would have been £8,252,000and revenue from continuing operations would have been £60,664,000. Includedin the £24,562,000 of goodwill recognised above are certain intangible assetsthat cannot be individually separated and reliably measured from the acquireedue to their nature. These items include customer loyalty and assembledworkforce. Acquisition of PASS Process Automation Software Systems Engineering GmbH On 15 June 2007 the Group acquired the business of PASS Process AutomationSoftware Systems Engineering GmbH, based in Bonn, Germany. The total cost of the combination comprised cash of €1,000,000 (£676,000), ofwhich €100,000 is held in escrow, and 160,728 ordinary shares, 32,146 of whichwere issued on completion. The total fair value of shares in the Group, bothissued on completion and to be issued in the future, was €1,000,000 (£676,000).The acquisition value is £4.21 per share, being the published price of theshares of SDL plc at the date of exchange. The provisional fair value of the identifiable assets and liabilities of PASSProcess Automation Software Systems Engineering GmbH as at the date ofacquisition were: Provisional fair value Book value to Group £'000 £'000 Intangible Assets - 626Property, plant and equipment 21 21Cash and cash equivalents 322 322Trade receivables 77 77Other receivables 12 12Trade payables (2) (2)Other payables (135) (376)Deferred tax - (187)Net assets 295 493Provisional Goodwill arising on acquisition 905 1,398 All fair values included in the above analysis are provisional fair values whichare based upon management's best estimate at the date of preparation of thefinancial statements. The fair values are only provisional due to the proximityof the acquisition to the date of the reporting period. Discharged by: £'000Costs associated with the acquisition 46Shares issued at fair value 135Shares to be issued at fair value 541Cash paid 608Cash held on escrow 68Total 1,398 Cash outflow on the acquisition:Net cash and cash equivalents acquiredwith the subsidiary 322Cash paid (608)Net cash outflow (286) From the date of acquisition PASS Process Automation Software SystemsEngineering GmbH has contributed a loss of £7,000 to the net profit of theGroup. If the combination had taken place at the beginning of the year, theprofit before tax and intangible assets amortisation for the Group would havebeen £8,838,000 and revenue from continuing operations would have been£54,796,000. Included in the £905,000 of goodwill recognised above are certainintangible assets that cannot be individually separated and reliably measuredfrom the acquiree due to their nature. These items include customer loyaltyand assembled workforce. 3. Segment information The Group operates in the Global Information Management industry. The primaryreporting format is determined to be business segments, being TranslationServices and Technology. The Translation Services segment is the provision of a translation service tocustomer's multilingual content. The Technology segment is the sale of enterprise and desktop technologydeveloped to help automate and manage multilingual assets, including web sites,together with associated consultancy and other services. The Group's geographical segments are based on the geographical destination ofrevenues. Six months ended 30 June 2007 (unaudited) Translation Technology Total Services £'000 £'000 £'000 Revenue 42,510 11,968 54,478Segment results 7,407 (106) 7,301Unallocated expenses (123)Profit before tax 7,178 The Technology segment result before amortisation of intangible assets is aprofit of £1,045,000. Six months ended 30 June 2006 (unaudited) Translation Technology Total Services £'000 £'000 £'000 Revenue 36,818 8,748 45,566Segment results 4,803 (630) 4,173Unallocated expenses (546)Profit before tax 3,627 The Technology segment result before amortisation of intangible assets is aprofit of £428,000. Year ended 31 December 2006 (audited) Translation Technology Total Services £'000 £'000 £'000 Revenue 77,852 16,859 94,711Segment results 11,332 (1,043) 10,289Unallocated expenses (913)Profit before tax 9,376 The Technology segment result before amortisation of intangible assets is aprofit of £1,052,000. Revenue by geographical destination was as follows: Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 United Kingdom 4,381 3,371 7,307Rest of Europe 20,560 15,880 34,121USA 20,950 18,595 36,823Rest of North America 5,399 4,460 9,704Rest of the World 3,188 3,260 6,756 54,478 45,566 94,711 4. Operating profit Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000Is stated after charging/(crediting): Research and development expenditure 2,298 2,372 4,724Depreciation of owned and leased assets 645 547 1,272Amortisation of intangibles 1,536 1,443 2,865Net foreign exchange differences (72) (424) (1,256) 5. Taxation Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000UK corporation tax:UK current tax on income for the period 337 399 670Adjustments in respect of prior periods - - (242)Tax credit for share options taken to equity 192 111 283 529 510 711Foreign tax:Current tax on income for the period 1,784 1,117 2,201Adjustments in respect of prior periods - - (72) 1,784 1,117 2,129Total current taxation 2,313 1,627 2,840 Deferred taxation:Origination and reversal of timing differences (1,488) 99 (277)Adjustments in respect of prior periods - - 471Deferred tax credit/(debit) for share optionstaken to equity 1,314 (156) 179Total deferred taxation (174) (57) 373Tax on profit 2,139 1,570 3,213 Due to the requirements of IAS 12, in conjunction with IFRS 2, the Schedule 23tax credit for share options exercised is largely recorded in equity. For the 6months ended 30 June 2007 this has the effect of increasing the effective taxrate by approximately 2.7% (at 31 December 2006: 3.2%; at 30 June 2006: 2.2%). 6. Earnings per share Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000Profit for the period attributable to equityholders of the parent 5,039 2,057 6,163 m m mBasic weighted average number ofshares (million) 65.5 61.9 62.2Employee share options and shares tobe issued (million) 2.5 1.6 2.5Diluted weighted average number ofshares (million) 68.0 63.5 64.7 Adjusted earnings per share: Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000Profit for the period attributable to equityholders of the parent 5,039 2,057 6,163Amortisation of intangibles 1,536 1,443 2,865Adjusted profit for the period attributableto equity holders of the parent 6,575 3,500 9,028 m m mBasic weighted average number ofshares (million) 65.5 61.9 62.2Diluted weighted average number ofshares (million) 68.0 63.5 64.7 Pence Pence PenceAdjusted earnings per ordinary share - basic(pence) 10.04 5.65 14.52Adjusted earnings per ordinary share - diluted(pence) 9.68 5.51 13.97 7. Interest-bearing loans On 31 March 2007 and 29 June 2007 the Group repaid on each date £500,000 of asecured bank loan bearing an interest rate of LIBOR + 1.25%. On 16 May 2007, as part of the short term funding for the acquisition of TridionHolding BV, the Group borrowed €1,500,000 using the Group's revolving facilityat LIBOR + 1.25%. This loan was subsequently repaid in full on 31 July 2007. 8. Share-based payments On 23 May 2007, 680,000 stock options were issued to certain key seniorexecutives and employees of Tridion Holding BV in conjunction with theacquisition of Tridion Holding BV. The exercise price of the options of 375pence was equal to the market price of the shares on the date of the issue. In addition, on 23 February 2007 321,074 share awards were granted under theterms of the long-term incentive program approved by the shareholders at the EGMon 27 April 2006. The exercise price of these awards was at 1p par value. 9. Derivatives and other financial instruments At 30 June 2007 the Group had forward contracts to sell $1 million each monththrough to 31 December 2007 at $1.91. As at 30 June 2007 the Group recognisedan unrealised gain of £169,000 in relation to this hedge (31 December 2006 -unrealised gain of £469,000). 10. General notes The financial information in these interim statements does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. Thefinancial information for the year ended 31 December 2006 is based on thestatutory accounts for the financial year ended 31 December 2006. Thoseaccounts, upon which the auditors issued an unqualified opinion, have beendelivered to the registrar of companies. 11. Events after the balance sheet date There are no known events occurring after the date of this report that requiredisclosure. Independent Review Report to SDL plc INTRODUCTION We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprises the Consolidated IncomeStatement, Consolidated Balance Sheet, Consolidated Cash Flow Statement,Consolidated Statement of Changes in Equity, and the related notes 1 to 11. Wehave read the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the company in accordance with guidance containedin Bulletin 1999/4 'Review of interim financial information' issued by theAuditing Practices Board. To the fullest extent permitted by law, we do notaccept 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, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, 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 Boardfor use in the United Kingdom. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data, and based thereon,assessing whether the accounting policies have been applied, unless otherwisedisclosed. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin scope than an audit performed in accordance with International Standards onAuditing (UK and Ireland) and therefore provides a lower level of assurance thanan audit. Accordingly we do not express an audit opinion on the financialinformation. REVIEW CONCLUSION On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. Ernst & Young LLPReading31 August 2007 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SDL.L