2011 annual report 
enabling global businesses  
to engage with their customers
2011 annual report and financial statements 2 sdl annual report and financial statements 2011 
3
contents
1 sdl overview 4
 our vision mission and values 6
 timeline of innovation 8
 financial highlights 10
 operational highlights 11
 executive chairman’s statement 12
 chief executive officer’s statement 14
2 sdl strategy 16
 implementing our strategy 18
 implementing our core values 20
 partner with our customers to drive their success  22
  case studies 23
 deliver thought leadership and innovation in all we do 28
  technology highlights 29
 act as one global and professional organisation 30
  building our brand 31
  delivering together 32
  sdl operating locations 32
  organisational capability 33
  processes and standards 33
 create an inspiring and rewarding environment for employees 34
  our people 35
  human resources highlights 36
  health and safety policy 36
  employment policy highlights 37
 be a role model in the communities in which we operate 38
  sdl environmental commitment 39
  sdl environmental policy 41
  sdl foundation 42
3 directors and corporate governance 44
 board of directors 46
 executive directors 48
 nonexecutive directors 49
 operating and financial review 50
 internal control and risk management 60
 corporate governance report 64
 investor relations 69
4 statutory information 70
 directors’ remuneration report 72
 directors’ report 84
 statement of directors’ responsibilities in respect of the group financial statements 92
 independent auditor’s report 94
 consolidated income statement 96
 consolidated statement of comprehensive income 97
 consolidated statement of financial position 98
 consolidated statement of changes in equity 99
 consolidated statement of cash flows 100
 notes to the accounts 101
 company balance sheet 139
 notes to the accounts 140
 five year summary 154
 corporate information 155 1 sdl overview
4 sdl annual report and financial statements 2011 
1
sdl overview
5 6
our vision mission and values
our vision
sdl believes everyone should be able 
to engage with the information they 
require in the way that they want sdl annual report and financial statements 2011 
1
sdl overview
7
our mission
we enable global 
businesses to engage 
with their customers 
in the language the 
media and at the 
moment they choose
we help businesses 
manage their brands 
and drive global 
revenues providing 
enterpriseready 
innovative solutions 
for managing the 
endtoend customer 
experience 8
timeline of innovation sdl annual report and financial statements 2011 
1
sdl overview
9
2012
acquired alterian plc
acquired calamares john hunter 
promoted to ceo and mark lancaster 
takes executive chairman role
2011
2010
acquired language weaver and xopus
launched sdl beglobal
acquired xyenterprise and fredhopper 
launched sdl trados studio
2009
2008
acquired idiom 
launched sdl automated 
translation solutions
acquired tridion pass 
engineering and trisoft
2007
2006
launched global authoring technology
acquired trados 
2005
2004
launched sdl knowledge‑based 
translation system
£64m annual turnover 1200 staff 
and offices in 25 countries
2003
2002
acquired machine 
translation technology
acquired alpnet and itp 
opened offshore facilities 
in china and thailand
2001
2000
launched cloud‑based translation 
management system
company floats on london 
stock exchange company 
grows to 280 staff
1999
1998
£10m annual turnover
expanded into asia 
europe and the us
1997
1996
first vc funding 
first acquisition – translation 
memory technology
1995
1994
£2m annual turnover company 
grows to 50 staff
company grows to 12 staff
1993
1992
company founded in maidenhead uk 
by mark lancaster 10
financial highlights
07
08
09
10
11
£1174m
£1588m
£1719m
£2035m
£2290m
revenue
 
07
08
09
10
11
145
161
174
174
173
operating margins
before amortisation of intangible assets
07
08
09
10
11
£170m
£256m
£298m
£354m
£397m
profit before tax
before amortisation of intangible assets
07
08
09
10
11
£160m
£264m
£301m
£271m
£326m
operating cash flow
key financial metrics
revenue £2290m 13
profit before tax and amortisation £397m 12
fully adjusted diluted earnings per share 3708p 11
operating cash flow £326m 20 sdl annual report and financial statements 2011 
1
sdl overview
11
january
sdl releases sdl tridion 2011 john hunter appointed as ceo 
and mark lancaster as executive chairman
february
sdl releases sdl worldserver 2011 increasing reuse and leverage 
throughout the translation process
march
sdl recognised as one of 100 companies that matter in kmworld 
and releases sdl translation management system 2011
april
htc partners with sdl to enrich product information
may
sdl acquires leading asset management company calamares 
and is recognised as trendsetter in kmworld’s hall of fame
june
macmillan cancer support upgrades its patient information 
system using sdl technology
july
sdl named as web content management leader by independent 
analyst firm forrester
august
sdl receives 2011 international business award for sdl beglobal™ 
in its best new product category
september
sdl releases free desktop application to translate documents and 
live chat and announces availability of sdl trados® studio 2011
october
sdl gains is en iso 134852003 quality certification
november
sdl recognised as a “leader” in gartner magic quadrant for web 
content management
december
sdl makes an offer to acquire alterian
operational highlights 12
executive chairman’s 
statement
dear shareholder
summary performance
we are pleased to report a year of significant growth our 
progress executing our strategic vision resulted in record 
revenue and profit performance revenue for the year 
was £2290m 2010 £2035m operating profit before 
taxation and amortisation of intangible assets “pbta” was 
£397m 2010 £354m net cash in the business at year end 
amounted to £704m 2010 £466m 
headline revenue growth of 13 includes acquisition related 
growth of 2 and a 1 decrease due to foreign exchange 
movements in the period resulting in an underlying organic 
growth at constant currency of 12
market opportunity
with sdl solutions setting an industry standard in the 
global information management marketplace enterprises 
are increasingly seeking strategic solutions to the growing 
challenge of customer engagement in the modern world as 
a result of deepening relationships with clients the cross
selling of our products and services is evolving into increased 
strategic sales across the group to leading brands such as 
atlas copco cnh getty images and hach company
investment into the future
we increased our research and development investment by 
8 in 2011 to £148m 2010 £136m focussing on market 
innovations and product vision through a targeted research 
and development programme key product launches in 2011 
were
•	 sdl tridion 2011 our market leading web content 
management product rated as a leader by forrester and 
gartner with new mobile targeting and personalisation 
technology
•	 sdl trados studio 2011 a new version of our leading 
desktop translation product
•	 sdl livecontent 2011 a stepchange enabling product 
which automates the production of smart interactive 
product documentation and
•	 sdl easytranslator which enables text to be translated 
instantly from any document and realtime chat to 
be translated across social networking sites in 60 
languages
in 2011 we made a strategically important investment in 
media asset management with the acquisition of calamares 
an enterprise solution for managing video and rich media 
we consider that live and on demand video will form an 
increasing part of web content in future this cloudbased 
solution supports internet television as well as social media 
platforms across a wide range of systems and devices 
including mobile this key capability branded sdl media 
manager has been integrated with sdl tridion 2011 and 
further integrations with other sdl products are planned 
moving forward
alterian acquisition
the acquisition of alterian plc completed in january 
2012 brings data analytics campaign management and 
social media capabilities to the group sdl has historically 
partnered with vendors who have these technologies 
however we believe an integrated product suite that allows 
our customers to track and analyse web and social activity 
is a crucial component in the creation and presentation of 
content providing our customers with integrated solutions 
that allow them to understand exactly what customers 
are saying and looking at in the context of what they are 
producing via our content management technology is 
important and provides closed loop engagement
global information management vision and strategy
as the internet enters its third decade of commercialisation 
there is now a mountain of rich digital information 
available for us to consume and because of this the web is 
increasingly becoming a central part of our lives with 21 
billion people now using the internet regularly and with 
the internet generation becoming the new decision makers 
in industry the web will become even more important to 
global businesses as expectations from the web increase
 
the cornerstone of sdl’s strategy is our belief that everyone 
should be able to engage with the information they require 
in the way they want in the language the media and 
moment they choose sdl will continue to look to the future 
and invest in technical solutions to address the opportunities 
corporations have to communicate with their clients in 
order to deliver the above vision we have invested in
•	 language technology – we believe that all 
communications will need to be instantly available 
in multiple languages at a fraction of today’s cost 
we are investing heavily into our recent acquisition 
of language weaver a worldleading automated 
translation solution we have integrated this technology 
into our web content management technology and our 
freelance translation editing suites we will seek to help 
our partners and customers bring their content into 
multiple markets at a fraction of the cost
•	 our content management technology which is 
considered best in class by industry analysts integrates 
with our translation management systems allowing 
content to be translated and published fast and 
efficiently in multiple languages
•	 personalisation and targeting technology with 
the acquisition of fredhopper a leader in retail 
personalisation and targeting this technology is now 
integrated into our web content management products 
allowing our customers to present the right information 
to users
•	 multimedia management technology – we anticipate an 
increasing amount of content on the web will be video 
graphics or pictorial as pictures are generally more 
easily digested than text by humans this technology 
has also been integrated into our content management 
solutions sdl annual report and financial statements 2011 
1
sdl overview
13
•	 data analytics social media management and 
campaign management – through the alterian 
acquisition – which have brought to us the ability to 
provide our customers with an integrated solution of 
monitoring analysing creating and targeting content 
to users
by enabling global businesses to engage with their 
customers we help them manage their brands and drive 
their global revenues we do this by providing enterprise
ready innovative solutions and services for managing the 
endtoend customer experience
communication has become highly sophisticated – 
complexity is no longer acceptable and simplicity of the user 
interface is highly valued and critical to successful customer 
engagement multichannel interaction is taken for granted 
we see a shift from content to experience exemplified by 
exponential growth in video and the growing dominance 
of social media as the opinion former synergistic reuse 
of content across channels and brands are key execution 
themes for global enterprises the acquisition of alterian 
complements sdl’s industryleading strength in web 
content management ecommerce and personalisation 
with new campaign management analytics and social 
intelligence propositions with sdl’s global information 
management platform sdl is now a leader in customer 
experience management
the fundamental growth drivers of the business remain 
unchanged sdl and its enterprise customer base is geared 
towards globalisation the growth of the internet and 
growth in digital and translated content in a multichannel 
environment we have been careful to invest in key areas 
where these secular trends are strongest so whilst the 
european market remains difficult we have exposure 
to the us asian south american and other emerging 
markets where these trends are showing themselves to be 
particularly robust
dividend
we remain confident in the operational cash generation 
capability of the business and the board is recommending 
a final dividend to the annual general meeting of 58 
pence per ordinary share a 55 increase over the maiden 
dividend paid in the preceding year 
board of directors
during the year a number of board changes have been 
made matthew knight was appointed as chief financial 
officer following john hunter’s promotion from this 
position to chief executive officer shortly after the year 
end mandy gradden was appointed as a nonexecutive 
director strengthening the independent component of 
the board jane thompson will leave the sdl board in 
april 2012 to focus on her own business interests having 
provided a valuable contribution to sdl and been chair 
of our remuneration committee having served as a non
executive director for 10 years john matthews will not be 
seeking reelection at the forthcoming 2012 agm john has 
delivered a wealth of experience to sdl and will be working 
as a consultant to the board during the next year we believe 
these board changes improve our corporate governance 
whilst continuing to provide us with a strong and multi
talented board going forward
sdl celebrates its 20th anniversary
2012 marks a significant milestone as sdl celebrates its 
20th anniversary as these results demonstrate the group 
has come a long way since its foundation in 1992 and ipo 
in 1999 we believe that sdl is well positioned to take 
advantage of the opportunities ahead and deliver value for 
shareholders sdl now operates in 38 countries with over 
2600 people over 1500 enterprise customers and has 
deployed over 170000 licences worldwide perhaps one of 
the most satisfying achievements is the creation of the sdl 
foundation our registered charity that has helped many 
people in environments less fortunate than ours to start 
building an infrastructure for the future as we move into 
2012 and beyond sdl’s philosophy will remain unchanged 
we will continue to invest in our staff customers and 
our technology which in turn provides returns to our 
shareholders
outlook 
in 2011 our global information management solutions 
continued to evolve and we executed strongly against our 
strategic objectives 
whilst macroeconomic concerns exist particularly 
over the weaker euro zone states and the future of the 
european currency union our pipeline remains solid 
we are experiencing higher growth in north america and 
our customer presence in emerging markets such as asia 
continues to expand and diversify we are well positioned 
with a broad portfolio of geographies and industry sectors 
which mitigates exposure to sector or regional economic 
events 
we are also entering 2012 with a broader set of products and 
services and we are confident in our strategy and execution 
capability the business has a very strong balance sheet that 
enables growth opportunities both organic and through 
acquisition to be pursued as they arise
as we look forward to the future we remain confident in our 
growth prospects and sdl’s long term potential to deliver 
further profitable growth and strong shareholder returns
mark lancaster
executive chairman
“2012 marks a significant milestone as sdl celebrates its 20th 
anniversary the group continues to innovate and we are delighted 
to report another year of significant progress” chief executive 
officer’s statement
14
summary
at sdl our vision is that we believe everyone should 
be able to engage with the information they require 
in the way they want and our mission is to enable 
global businesses to engage with their customers in the 
language the media and at the moment they chose 
our core value proposition is to support businesses in 
increasing brand equity and driving revenues on a global 
basis and we seek to do this by providing enterprise ready 
innovative solutions to manage the endtoend customer 
experience  
our strategic objective is to deliver superior returns to 
shareholders through execution of a growth strategy on 
five key dimensions key account growth cross selling 
partner channels and strategic partnership territory 
expansion and technology leadership and innovation 
i am pleased to report that we made positive progress 
in all of these areas in 2011 which proved to be a 
strong year in terms of financial performance and was 
also an exceptional year for new client acquisition and 
for releasing new innovative products to the global 
marketplace
revenue for the year was £2290m 2010 £2035m 
an excellent performance against a mixed demand 
environment which varied region by region and segment 
by segment all businesses contributed positive revenue 
growth in 2011 headline revenue growth of 13 includes 
acquisition related growth of 2 a 1 decrease due 
to foreign exchange and underlying organic growth 
at constant currency of 12 performance in content 
management continued to be particularly strong with 
constant currency revenue growth of 19 driven by 
demand for sdl tridion 2011 a new product release 
to the global marketplace and continued penetration 
of structured content products into the burgeoning 
technical documentation marketplace increased cross 
selling activity has also underpinned growth moving 
into 2012 the sales pipeline remains robust reflective of 
new win momentum and we see no discernible change 
in decision patterns for buying sdl solutions despite an 
uncertain economy 
operating cashflow from operations was £326m 2010 
£271m average dso was stable which was particularly 
pleasing in a challenging environment for many 
corporations and ensured that the business maintained 
strong cash flow during the year at the end of 2011 we 
had £704m of cash on the balance sheet which combined 
with £20m of undrawn revolving credit facilities provided 
a robust base for the completion of the alterian acquisition 
on 27 january 2012 
segmental performance
we continue to report the business in three operating 
segments in 2011 this change was initiated in 2009 and 
enables our shareholders to more fully understand the 
principal business lines of the group performance by 
segment is as follows  
content management technologies contributing 
£527m or 23 of revenue to the group and £88m or 
22 of group pbta 2010 contributing £450m or 22 of 
revenue to the group and £77m or 22 of group pbta
total segment revenue grew by 17 comprising 2 
foreign exchange a negligible effect from acquisitions and 
19 underlying organic growth at constant currency 
this is a very strong performance where the business 
continued to differentiate its products and solutions 
through a compelling program of innovation which 
delivered significant new product releases in 2011 
sdl web content management solutions performed 
well particularly in north america the new sdl tridion 
2011 product was launched at the start of 2011 with new 
mobile targeting and personalisation capabilities this 
release was cited by both forrester and gartner as a leader 
and has gained significant traction in the global market 
building on the established reputation of sdl tridion
our web content management solutions were further 
enhanced by the small but strategic calamares acquisition 
a cloud based enterprise solution for managing video and 
other rich media assets this new capability now branded 
sdl media manager is fully integrated with sdl tridion 
2011 and supports a broad range of media systems 
and devices including web mobile internet protocol 
television iptv and various social media platforms we 
expect the use of live and on demand video to increase 
significantly as we move forward against an environment 
where consumer preference for video related content as a 
preferred media is also growing rapidly 
structured content technologies continued to make 
exceptional progress in both the established s1000d and 
emerging dita markets important sales were made in 
asia a relatively immature market for these products with 
interest seeded creating a solid platform for future growth 
we are also proud to have released sdl livecontent 2011 
during the year this is a stepchange enabling product 
which automates the production of smart interactive 
product documentation we believe that sdl offers the 
most complete endtoend solution for creating and 
managing user documentation vital to the endtoend 
user experience sdl annual report and financial statements 2011 
1
sdl overview
15
new clients in 2011 include compassion international 
gamestop mcb group sharp eva air abu dhabi airport 
company brother life technologies corporation osisoft 
tibco software inc and mattel
language technologies contributing £401 million or 
18 of revenue to the group and £52 million or 13 of 
group pbta 2010 contributing £339 million or 17 of 
revenue to the group and £33 million or 9 of group pbta 
total segment revenue grew by 18 comprising 1 
foreign exchange 11 acquisitions and 8 underlying 
growth at constant currency the business made 
significant progress in driving profitability in 2011 and 
also established a very strong program of innovation to 
continue sdl leadership in the language technology 
space in the future our portfolio of products delivers 
innovation to users ranging from individual translators 
to global enterprises at our core is a philosophy of 
introducing technologies that change the way people 
work driving efficiency and consistency in global business 
operations in deriving optimal performance from complex 
language assets      
in 2011 we saw the market and appetite for machine 
translation continue to grow and we continued to invest 
in building our fundamental science capability in this 
important area we believe machine translation will have 
a profound future impact on the global marketplace for 
language and will form a significant component of future 
translation strategies for some rapidly growing content 
types language weaver is now fully integrated into the 
language technology business unit and has achieved 
strong sales growth over the equivalent period last year 
 
demand for our enterprise language technology business 
was mixed with stronger demand in europe than in north 
america during the year we saw momentum build for 
our desktop product sdl trados studio 2011 which we 
released to the global marketplace in september 2011 
we continued to invest in building our asia presence 
which we believe will be an important future market for 
language technology products and we see increasing 
interest from asian corporations in optimising processes 
for management of language assets 
new clients in 2011 included agip alfa laval ab nordea 
bank denmark tencent inc ricoh company ltd and 
panasonic business services co ltd
language services contributing £1362 million or 59 
of group revenue and £255 million or 65 of group 
pbta 2010 contributing £1246 million or 61 of group 
revenue and £252 million or 71 of group pbta 
2011 was a year of strong revenue growth for this segment 
and the business continued to exhibit solid growth 
characteristics and strong profit and cash generation it 
was an exceptional year for new client acquisition across 
the business which more than offset any individual 
customer variations as the business further intensified its 
account management approach the business continued 
to develop its global infrastructure to drive target territory 
presence and gained new business in latin america and 
australia we are also seeing progress in the nordic region 
following organisational changes previously initiated 
headline revenue growth of 9 was achieved comprising 
1 foreign exchange and 10 underlying growth at 
constant currency 
north america was the star performer with excellent 
revenue growth against a demand environment that 
proved highly resilient with europe also growing 
positively performance in asia was mixed and the business 
did an outstanding job of maintaining effective operations 
through the natural disasters in japan and thailand 
invoking contingency plans to continue to operate 
effectively with our clients in this period this is a tribute to 
the quality of the sdl team in asia our client portfolio in 
asia continues to expand and i am confident in our future 
growth prospects and positioning in the region founded 
on a high quality wholly owned local operation 
we see the market for language services starting to 
segment quality is an absolute in this market and we 
were very pleased to further expand our quality systems 
and certifications in 2011 essential components of a 
premium offer to our global clients machine translation 
is also having an impact as new content types start to 
emerge for certain applications we see more demand for 
consulting approaches that target process optimisation as 
companies wrestle with the challenge of how to effectively 
leverage language assets for brand consistency and how to 
drive innovation though new product release into global 
markets we continue to concentrate on ensuring sdl 
has the most comprehensive solution set in the global 
marketplace to directly address these needs right through 
the endtoend translation supply chain   
significant new client wins during the year included marks 
 spencer hotelde ag semcon springer healthcare ltd 
and kosan crisplant 
john hunter
chief executive officer
“we have confidence in our strategy and execution capability and we have 
a strong balance sheet which gives us the ability to pursue strategic growth 
opportunities both organically and through acquisition” 2 sdl strategy
16 sdl annual report and financial statements 2011 
2
sdl strategy
17 18
implementing our strategy
sdl strategic objectives
sdl has implemented a fiveelement growth strategy designed to deliver strong financial 
performance drive brand equity and maximise shareholder returns
key account growth
•	 account management is key supported by thorough account planning and targeting 
processes
•	 target marketing campaigns and events for specific markets or regions
•	 expand consulting proposition for enterprises wishing to trade effectively in 
international markets and dealing with the challenges of globalisation
•	 focus on selected vertical market sectors
cross selling
•	 deploy multiple sdl solutions allowing our customers to leverage endtoend 
efficiencies in their global information management
•	 cross selling penetration into the sdl customer base
•	 leadership and territory collaboration focus
partner channels and strategic partnership
•	 selective channel expansion with complementary partner organisations
•	 partner for missing capability
•	 academic collaboration
•	 partner to expand into new vertical market segments
territory expansion
•	 asia strategy based around japan china and korea
•	 selective expansion in latin america
•	 address specific customer and vertical market opportunities in nordics
technical leadership and innovation
•	 innovate around the core of our products to maintain a marketleading position
•	 maintain significant investment in innovation
•	 strong focus on prioritisation via product roadmaps
•	 selective ip asset acquisition strategy sdl annual report and financial statements 2011 
2
sdl strategy
19
measuring our success – strategic performance indicators
•	 revenue – underlying constant currency growth of 12 achieved
•	 profit before tax and amortisation – growth of 12 achieved
•	 net cash flows from operating activities – growth of 20 achieved
•	 technology revenues – grown to 41 of group total
•	 acquisition – expanded presence in customer experience 
management with the acquisition of alterian and acquired 
calamares
•	 innovation – 37 new product launches in 2011 delivered to plan
•	 cross selling – 380 customers in total 20
implementing our core values
in 2011 we sought customer feedback of their perception of sdl and our 
brand this has enabled us to further clarify our vision mission and core 
values and ensure these are tightly aligned to our strategic direction and 
customer requirements – linking organisational culture and behaviours 
strongly to the overall strategy for the company
in the 2010 annual report we reported on progress in implementing our 
strategy against seven key focal points as part of updating our vision 
mission and values we have streamlined these focal points into five core 
values to capture how we will deliver our vision linked to these values 
are key performance indicators set out in the table below together with 
implementation highlights for 2011
at the core of what we do is our belief that everyone should be able to 
engage with the information they require in the way they want leading to a 
compelling customer experience
core value key performance indicators implementation highlights
partner with 
our customers 
to drive their 
success –  
creating  
exceptional 
customer  
experience
•	new business acquisition – 
gain strategically important 
new customers
•	we have had an excellent year for new customer  
acquisition performing above target examples include 
mattel brother semcon and sharp
•	leverage sdl’s global  
capability to achieve growth in 
high value key accounts with 
cross sell opportunity
•	we have grown the number of account managers and 
customers under account management driving penetration 
and cross selling which increased to 380 customers in 2011
•	develop channel sales via 
partner organisations to 
broaden sdl’s sales reach and 
potential customer base 
•	we have increased our channel partners in 2011 and see 
significant future growth potential in channel sales
•	the alterian aquisition adds highly strategic marketing 
service provider channels sdl annual report and financial statements 2011 
2
sdl strategy
21
core value key performance indicators implementation highlights
deliver thought 
leadership and 
innovation in all 
we do
•	achieve development roadmap 
goals through a targeted  
innovation investment 
programme
•	investment in development has increased by 8 to £148m 
and achieved increased efficiencies via low cost high skill 
nearshore and offshore centres
•	deliver planned product 
launches
•	we have released 37 new products and versions as planned 
in 2011 including
 sdl tridion 2011
 sdl livecontent 2011
 sdl easytranslator
 sdl trados studio 2011
 sdl tms 2011
 sdl worldserver 2011
•	engage with our customers to 
align our product vision
•	we have communicated with customers through direct  
customer research gim events in europe north america 
and asia sector trade shows and our own sector events and 
webcasts
act as one 
global and 
professional 
organisation
•	build our brand with customers 
staff and the marketplace
•	we have sought feedback from customers in updating our 
brand which has been refreshed in 2011
•	our new mission vision and values were rolled out globally
•	geographic and cultural 
diversity
•	expansion of customer base in japan china and korea
•	expansion in the nordics
•	implement global quality 
processes
•	achieve relevant standards  
certification
•	there has been significant progress harmonising global 
processes and gaining iso accreditations in 2011
create an 
inspiring and 
rewarding  
environment  
for employees
•	expand the knowledge series to 
further develop and harmonise 
staff communication standards 
across the group
•	the knowledge series has been expanded and we are  
progressively introducing a certification framework for 
training related components
•	implement development 
training for operational 
management
•	a management development training plan has been 
implemented in europe and north america
•	implement structured 
performance management 
process
•	a structured performance management process has been 
rolled out to target divisions
•	create a succession pool for key 
technical roles and management 
appointments
•	a group talent review process has been implemented
•	global communities for statistical science and development 
are being implemented
be a role model 
in the communi
ties in which we 
operate
•	contribute towards the sdl  
foundation
•	sdl foundation funding was £260000 12 new projects 
were funded in thailand laos india africa south america 
and the uk six projects from 2010 were completed which 
included schools projects in india and laos and a local 
infrastructure project in nepal
•	roll out the code of conduct to 
all staff
•	the code of conduct has been communicated through a 
written policy the knowledge series and presentations at 
various office locations globally
•	expand the carbon emission 
assessment to more sites 
globally
•	carbon emission measurement was expanded from the uk 
to locations in europe us and asia for the uk head office 
emissions fell by 13 22
partner with our customers to 
drive their success 
we see our own success as dependent on our customers’ 
success proactively helping customers achieve their business 
goals by intimate understanding of their needs and delivery 
of compelling value propositions to meet those needs 
we view our customer relationships as partnerships and use 
every customer interaction as an opportunity to inspire and 
build the relationship sdl annual report and financial statements 2011 
2
sdl strategy
23
sdl helps osisoft enable customers to find the information they need 
osisoft delivers the pi system the industry standard in enterprise infrastructure for 
management of realtime data and events the pi system enables users to manage assets 
mitigate risks comply with regulations improve processes drive innovation make business 
decisions in real time and to identify competitive business and market opportunities
customers and employees of osisoft need specific technical information and user assistance 
quickly at their fingertips responding to this need the osisoft technical publications team 
envisioned an online library that makes it easy for customers to search and find just the 
right information to achieve this vision the osisoft team partnered with sdl and set out 
on a path to move their technical information out of large technical documents into topics 
of information that could be delivered dynamically based on customer needs the topics 
include collaborative features to collect feedback and monitor usage to enable this process 
the team selected sdl trisoft and sdl livecontent  
the two solutions from sdl’s suite of structured content technologies makes it possible for 
the osisoft team to develop content in topics that can be dynamically published to online 
channels and enable customers to more easily find just the right information to manage 
their mission critical applications 
•	 online dynamic library of information with topic commenting and analytics
•	 centralised content resource with versioning features and localisation support
•	 multichannel online publishing to support static document deliverables and 
dynamic library
case study 24
compassion international partners  
with sdl to strengthen online brand marketing
compassion international has launched its new website employing 
sdl tridion® – sdl’s web content management solution as one of 
the world’s leading child development organisations this solution 
significantly increases the charity’s online presence and enables it to 
effectively engage with and provide a positive user experience for its 
donors 
the redesign enabled the charity’s internet marketing staff to easily 
deploy over 5000 web pages through sdl tridion’s blueprinting® 
technology additionally the new website facilitated a new “shopping 
cart” donation system which allowed people to donate to the charity 
and pay for a “child sponsorship” in one transaction increasing 
the average donation made by each visitor by 55 percent the 
implementation of sdl tridion attracted more attention from google 
and other search engines to the new website and since june 2011 the 
search engine traffic has grown by 25 percent
•	 enhanced user experience for compassion international’s donors
•	 increased the average donation by 55
•	 increased search engine traffic by 25
case study sdl annual report and financial statements 2011 
2
sdl strategy
25
national instruments chooses sdl to meet global dita  
content requirements
national instruments ni transforms the way engineers and scientists design 
prototype and deploy systems for test control and embedded design 
applications ni had a partnership with sdl to provide them with the ability to 
reuse translation content as an extension to this partnership ni started to work 
with sdl’s structured content technologies division to improve the efficiencies 
of managing many different product releases sdl trisoft was a logical fit for 
national instruments as the product roadmap aligns with the vision of the 
technical communications team this set out to deliver more information at higher 
velocity through multiple channels and in more of their customers’ languages
sdl trisoft’s ability to manage advanced product documentation versions 
and configurations in multiple languages was key for ni’s complex product 
lines in which content is reused across product teams throughout the content 
development lifecycle robust support for the oasis dita v12 standard was 
a core requirement including the ability to easily configure specialisations and 
metadata to meet the business needs of ni the deployment of sdl trisoft builds 
upon the technology partnership created with ni’s use of sdl trados studio® for 
translation memory management
•	 optimised customer experience
•	 increased consistency through content reuse across the organisation
•	 advanced product documentation version control
case study 26
yara international asa builds on partnership with sdl to enhance web presence  
in 26 languages
yara international asa is the world’s leading chemical company that converts energy 
natural minerals and nitrogen from the air into essential products for farmers and industrial 
customers yara is a truly international company with production sales and services 
research and support operations in the americas europe africa and asia it uses global 
strength to deliver local benefits
yara has an extensive web presence through its 26 language sites having previously 
selected sdl tridion as their web content management system yara decided to partner 
with sdl language services division to translate content to populate their website in over 
26 languages they also needed to deliver high quality translations for their corporate 
communications and marketing material environmental reports research and development 
analysis human resources legal documents and video content sdl’s solution for yara will 
make it possible to have an automatic workflow from their content management system 
to sdl’s translation management system including desktop publishing dtp and client 
validation online it was important to address yara international’s fragmented translation 
spend and provide a central automated solution in which to reuse translations between 
departments and jobs and provide consistency in terminology this helps them improve 
brand consistency globally and achieve faster timetomarket
•	 web visibility in 26 languages
•	 central automated solution for improved efficicencies and accelerated timetomarket
•	 enhanced brand consistency across global communications 
case study sdl annual report and financial statements 2011 
2
sdl strategy
27 28
deliver thought leadership and 
innovation in all we do
we strive to understand the current and future business 
needs of the markets in which we operate and nurture and 
value creativity and innovation we continue to build on our 
entrepreneurial roots to develop compelling and innovative 
technologyled solutions that improve the way that people 
work and that define and drive market success delivering 
bestofbreed innovative technology and growing our 
offerings through acquisitions is at the core of our business sdl annual report and financial statements 2011 
2
sdl strategy
29
we have continued to move with the execution of our product strategy in 2011
 
•	 37 products and versions released to schedule
•	 the new version of sdl tridion 2011 simplifies usability and continues our leadership in 
web content management including mobile targeting and personalisation forrester and 
gartner have recognised our leadership in this space in their latest reports
•	 a new release of sdl worldserver in 2011 
•	 with the acquisition of calamares sdl extended its customer engagement offering to 
include video and rich media management
•	 with the new release of sdl livecontent 2011 sdl provides smart interactive product 
documentation
•	 sdl also released a new version of sdl livecontent s1000d 50 which expands delivery 
capabilities for interactive electronic manuals ietm
•	 with the public beta release of sdl easytranslator sdl created an allinone desktop 
companion that enables users to translate text instantly from any document and to chat in 
realtime with anyone in their favourite chat services
•	 sdl trados® studio 2011 delivers significant innovation to the world of translation driving 
new levels of efficiency and collaboration
•	 in addition to the main product releases sdl continues to deliver updates on existing 
product lines and closer integrations between the different sdl solutions
technology highlights 30
act as one global and professional 
organisation
sdl now operates in 70 offices across 38 countries to be the best 
partners to our customers and operate the most efficiently we 
act as one expanding globally as our requirements develop we 
present the entirety of our global solution sets to our customers in a 
compelling way focusing on enterprise level impact and scale we 
see our global geographic and cultural diversity as a strength and 
view the sdl team as stronger than any individual  sdl annual report and financial statements 2011 
2
sdl strategy
31
our vision mission and values have been updated after consultation with our customers these are key to 
our brand development and reconfirming the foundations that underpin it
our brand leverages the strengths of the past and paints a compelling direction for the future – one of 
creativity innovation vision and strategic partnership with our customers and partners sdl has grown 
both organically and through acquisition and our vision is intended to create one unified organisation with 
a clear sense of direction and purpose bound by a single modern brand
in 2011 we have undergone a branding update for sdl we sought input from our key customers into 
how sdl can deliver value for them into the future our customers have strongly contributed to our vision 
mission and values which embrace customer partnership as a core principle
the four main elements of our brand are
our tagline – because business is global
based on our values the core of our 
business is to provide compelling solutions 
that help global businesses inspire a positive 
customer experience 
visual identity
the refreshed look and feel presents sdl 
in a more modern way and reflects our 
innovative and entrepreneurial spirit 
core values
sdl is committed to driving success through 
a cohesive set of core values that underpin 
strategic operations 
brand architecture
all products and brands continue to come 
under the main sdl brand and our logo is 
consistent across all products 
sdl is the recognised leader in global information management 
servicing 41 of the top 50 global brands
•	 it builds brand equity drives revenue growth and accelerates 
speed to market for new products
•	 it maps the customer journey and drives the customer 
experience by reducing complexity and addressing  
multichannel engagement and relevancy
•	 with the recent acquisition of alterian sdl is now a leader in 
customer experience management
building our brand
analysis  
intelligence
content 
creation  
management
campaign 
management
multichannel 
engagement
language
management
customer
experience
optimisation
consumer
channel
content  language 32
hotelde uses our sdl translation management system and has now also started to work with 
language services to benefit from a onestop solution hotelde ag is a public company and 
one of the leading european online hotel reservation services
the horiba medical segment designs develops and distributes worldwide in vitro diagnostic 
systems mainly destined for biological analysis in medical laboratories horiba’s expertise in in 
vitro diagnostics is one of the most respected in hematology worldwide and contributes today 
to the health of tomorrow sdl helps them to manage their global information management 
process by making sure that the content is created and stored efficiently in their content 
management system sdl trisoft before going to sdl language services for translation 
santiago sao paulo
chicago
denver
los angeles
montreal
new york
plano
san jose
seattle
superior
waltham
wakefield
valencia
sydney
bangkok
bangalore
beijing
changsha
ho chi minh
mumbai
seoul
shanghai
shenzhen
singapore
taipei
tokyo
europe
amsterdam
athens
bagnolet
bonn
bray
bucharest
budapest
bydgoszcz
clujnapoca
copenhagen
granada
hengelo
hradec kralove
istanbul
kaslik
kiev
leuven 
ljubljana
maidenhead
mechelen 
munich
oslo
rome
sheffield
st petersburg
stockholm
stuttgart
the hague
turku
zagreb
north america
south america
australia
asia
delivering t ogether
sdl operating locations sdl annual report and financial statements 2011 
2
sdl strategy
33
sdl is a global business with a geographically and culturally diverse employee base we are committed to 
building presence in developing markets and developed markets where we see the greatest opportunity 
high quality locally led organisations backed by sdl’s global capabilities and group wide processes and 
systems are key to our success
•	 we have invested in expanding capacity in asia where china has been a significant growth market 
spearheaded by language technologies
•	 the nordics region also grew in 2011 where we have invested in account development and new 
leadership capability
•	 we are investing in selective expansion of south american operations 
•	 we have expanded key account management capability to enable the most effective working 
relationships possible with our largest clients across their business units and geographies
•	 development teams are organised globally directed by the chief technology officer 
•	 we have increased the use of lower cost high skill nearshore and offshore centres staff in these 
locations have increased by around 30 to 13 of total employees
processes
•	 management development training rolled out in europe and north america
•	 a global methodology for risk management has been established and piloted in the uk which will be 
rolled out in 2012 including iso 27001 certification for key locations
•	 global supply chain optimisation has delivered efficiencies and savings across the business
standards
•	 achieved iso 27001 recognised information security management system for the uk
•	 expanded the scope of iso 9001 quality management system and en 15038 translation to cover 
most global operations
•	 achieved iso 13485 quality and risk management system for the medical device industry to support 
growing business in this vertical sector
•	 achieved iso 14001 environmental
product attestations 
•	 forrester – sdl tridion named a leader 
•	 gartner – sdl tridion a leader in magic quadrant
•	 sdl beglobal won the best new product in the saas category in the 2011 international business awards
•	 kmworld hall of fame award for sdl’s contribution to the content industry
organisational capability
processes and standards 34
create an inspiring and rewarding 
environment for employees
we want to make sdl the place to work – an inspiring rewarding 
dynamic challenging and creative environment strongly orientated 
to meeting our customers’ needs  sdl annual report and financial statements 2011 
2
sdl strategy
35
people are the core of sdl’s success with a global workforce of 2373 there is strong focus 
on communication training collaboration through communities and providing the right 
opportunities to meet the career aspirations of our staff 
our people 36
human resources highlights
the chief executive officer has global responsibility for human resources and health and safety  specific tasks are 
delegated to local office managers and suitably trained individuals in the organisation  
employment performance 
indicators
2011 implementation highlights
staff training 
induction  
development
provide employees with the 
right career opportunities 
and necessary development 
framework to realise their 
potential
expanded the knowledge series a programme that provides 
tiered modular training that has raised skills and awareness 
standards across sdl  the sdl executive actively participates 
in the knowledge series
conducted a management development programme for 75 
key managers across the business
progressively rolling out a unified performance management 
system across target business units and geographies
certification staff certification enhances 
and raises the value of sdl 
employees
a certification framework has been put in place to include 
technical and process training the knowledge series and 
management development programmes 
innovation nurture skills and enable greater 
collaboration and knowledge 
sharing across the group
software development and statistical science communities 
have been initiated to promote our core capability to innovate
talent review identify critical skills a groupwide process to identify critical skills has been 
implemented along with succession plans
staff awareness promote the values behaviours 
and culture embraced by sdl
sdl’s new vision mission values and code of conduct have 
been rolled out globally
health and safety policy
sdl recognises and accepts its responsibility as an employer to provide safe and healthy working conditions for all its 
employees  the company commits to maintaining a safe working office environment complying with relevant local 
legislation and providing training where appropriate in matters of health and safety 
sdl’s policy on health and safety includes the following
•	 to control the health and safety risks arising from sdl’s activities
•	 to provide and maintain safe equipment
•	 to establish measures for legal compliance in each global office
•	 to ensure all employees are competent to do their tasks and to give them adequate training
•	 to maintain safe and healthy working conditions and
•	 to review and revise this policy as necessary at regular intervals
there were no fatalilties on company business during 2011 sdl annual report and financial statements 2011 
2
sdl strategy
37
•	 we are one team – embracing core values of innovation collaboration and communication
•	 we are all ambassadors for sdl – upholding the highest standards of behaviour with customers suppliers 
communities and one another this is summarised in the code of conduct which has been rolled out in 2011
•	 sdl rejects all forms of harassment unfair treatment and bullying all forms of discrimination will be 
explicitly rejected whether on the basis of gender age race skin colour ethnic or national origin trade union 
membership marital status disability religion sexual orientation or any other form of discrimination prohibited 
by national law
•	 we do not operate forced labour practices and will only employ individuals who are working voluntarily of their 
own free will all forms of coercion will be explicitly rejected
•	 sdl is proud of its globally diverse culture in our workforce and through our recruitment processes we value 
diversity and equal opportunity
•	 leadership capability is essential to success – our leaders are expected to prioritise effective communication to 
employees
•	 where possible we provide employees with the opportunity to participate in the value creation of sdl with share 
ownership plans that are being progressively introduced to large geographies
•	 we fully consider applications from disabled candidates and we will aim to provide continuity of employment 
where existing employees become disabled
•	 sdl foundation – we enable our employees to be socially responsible and contribute to the communities in 
which they live and we actively encourage our employees to contribute ideas to the sdl foundation a charity 
which supports sustainable causes around the world we enable our employees to participate in projects 
sponsored by the sdl foundation
•	 we openly assess individual performance and provide clarity of personal objectives that are aligned with 
corporate goals
•	 where it is custom and practice or required by local law management consults and constructively engages with 
representatives or works councils
employment policy highlights 38
be a role model in the communities in 
which we opera te
being present in local communities is something we 
consider a privilege we will strive to improve quality 
of life and be morally responsible in the communities 
in which we operate we operate ethically and with 
integrity in all we do  sdl annual report and financial statements 2011 
2
sdl strategy
39
as a critical component of effective corporate governance the ceo is responsible for sdl’s corporate social 
responsibility ‘csr’ the board regularly reviews developments and emerging trends in these areas
as a socially responsible organisation with an engaging csr profile sdl is committed to reducing its 
environmental impact to further enhance its environmental leadership sdl has pledged to limit its 
contribution to climate change by managing and counteracting its greenhouse gas emissions 
in 2011 we extended our measurements to benchmark our offices in the usa superior the netherlands 
amsterdam and japan tokyo we also report back on the progress we have made at our head office in 
maidenhead relative to the baseline measured in 2010
we have established an overall target to progressively reduce our tco2efte emissions by over 5 per 
annum over three years for these four offices in the 2011 scope
conservation of the environment is an integral part of our corporate social responsibility network effective 
carbon management plans optimise resource usage generate commercial return and enhance the sdl 
brand
key measures under iso 14064 scope 1 direct emissions scope 2 energy indirect emissions and scope 3 
other indirect emissions 
activities included
scope 1 
direct emissions
scope 2 
indirect energy emissions
scope 3 
indirect other emissions
gas electricity business travel
company vehicles commuting
other eg refrigerant 
gases and diesel
other eg water waste  
postage couriers hotels
sdl environmental commitment 40
the analysis shows that sdl’s carbon 
emissions for the four offices during this period 
amounted to 3498 tonnes of co2e
headline results 
the largest source of emissions was electricity consumption  
36 followed by business travel 32 and staff 
commuting 25 the maidenhead office accounted for 
42 of the four offices’ total emissions
year on year analysis
head office footprints 2010  2011
sdl environmental commitment
electricity
travel
commuting
other
1250
1112
865
271
electricity
travel
commuting
other
32
36
7
25
169101
146532
225
220
75
67
total footprint tco
2
e
staff no  fte
total footprint  fte
2011 2010 2011 2010 2011 2010
when compared with the 2010 footprint
1
 the maidenhead 
office’s footprint has been reduced by 13 226 tco2e 
emissions from all categories have decreased with 
business travel emissions falling by 23 and electricity by 
4 comparing the footprint by the benchmark of staff 
numbers fte shows the relative emissions have fallen by 
11 and 4 respectively
electricity
travel
commuting
other
5726
2010 2011 2010 2011
5472
6181
4779
4312
3812
691
590
2010 2011 2010 2011
13

2

11

1
to allow comparison the 2010 footprint has been 
recalculated using current emissions factors  sdl annual report and financial statements 2011 
41
2
sdl strategy
summary emissions by office
key implementation activities
1 extend measurement scope to other sdl operations
2 establish clear carbon management goals considering both direct and indirect emissions including
•	 minimising travel through use of alternative technologies eg cisco webex and microsoft ocs     
•	 implementing recycling schemes
3 consider greener and energy efficient systems where they have demonstrable commercial return
•	 new office design and sourcing decisions for new offices 
•	 property maintenance plans
•	 encourage extension of operating life of equipment inhouse and with third parties
4 provide clear mechanisms to help employees conribute to preservation of the environment
•	 car pool and share transportation costs
•	 expand hr benefit schemes to embrace environmental objectives
•	 contribute to reduce waste and protect the environment
•	 the cycle to work scheme has been implemented in the uk
5 consider environmental impact of all strategic sourcing programs including cost effective delivery 
options – request suppliers to support equipment recycling cost effective delivery and life extension
•	 leverage procurement to evaluate sourcing strategies to move progressively to those suppliers that 
demonstrate commitment to sustainable business practices
sdl environmental policy
we have used staff numbers fte against which to benchmark emissions
emissions
tonnes 
co
2
e
 of  
emissions
staff fte tco
2
efte
maidenhead 14653 42 220 67
superior 9960 28 137 73
amsterdam 5857 17 125 47
tokyo 4503 13 98 46
total 34973 100
all environmental data 
externally validated by 
carbon clear ltd 42
in in 2011 the sdl foundation has continued its support for less fortunate communities around 
the world contributing to a total of 18 separate projects acting as role models within the 
communities in which we operate is one of sdl’s key values and sdl employee involvement 
remains a crucial part of the foundation’s work increased participation from individuals and teams 
has been evident both with additional fund raising activities and direct charity involvement
the prince’s trust uk
in 2011 sdl became a patron to 
the technology leadership group 
tlg of the prince’s trust the 
uk’s leading youth charity this 
provides over 400 ukbased sdl 
employees the opportunity to become 
personally involved in fundraising and 
development activities in september 
30 sdl employees signed up to take 
part in the annual palacetopalace bike 
ride event cycling 45 miles around 
london and raising £5500 for the 
prince’s trust  
“sdl is clearly committed to making a 
positive impact on the communities in 
which it operates and we look forward 
to working with sdl employees as they 
support the work of the prince’s trust” 
– technology leadership 
group committee
rejoice charity thailand
rejoice charity provides medical 
social and educational support to 
communities infected with and 
affected by hivaids throughout 
2011 the sdl foundation has 
contributed to the medicine and 
formula milk programmes as well as a 
scholarship programme sponsoring 
12 children who otherwise may not 
have been able to attend school  the 
sdl thailand office remains actively 
involved with this charity 
“thank you sdl i would like to thank 
you for helping me…i will use the 
money in useful ways i promise for 
studying school equipment and 
food thank you for giving me this 
scholarship” 
– narummon wongdee age 15
sdl foundation sdl annual report and financial statements 2011 
2
sdl strategy
43
xieng nguen school laos
this application was nominated 
by an sdl employee based in 
stuttgart germany having learnt 
about the village’s poor schooling 
conditions whilst on vacation the 
sdl foundation has funded the 
construction of new classrooms 
allowing full time schooling regardless 
of the weather
mencap uk
mencap a uk based charity provides 
comprehensive care and respite to 
people with learning disabilities and 
their families the sdl foundation 
pledged £10000 with the sheffield 
office raising additional funds through 
a range of successful fundraisers 
including cake sales a breakfast club 
and a summer bbq
“sdl is a shining example of how 
fantastic corporate fundraising can be 
and we are so grateful to have been your 
chosen charity for 2011” 
– lucy mckane sheffield mencap 3 directors and corporate govern
ance
44 sdl annual report and financial statements 2011 
3
directors and corporate governance
45 46
pictured from left to right
front row john hunter mark lancaster and 
matthew knight 
back row jane thompson chris batterham 
david clayton mandy gradden joe campbell 
and john matthews
board of directors sdl annual report and financial statements 2011 
3
directors and corporate governance
47 48
executive directors
mark lancaster executive chairman age 50  
appointed 31 january 1992
mark lancaster founded the group in 1992 having identified the need for a highlevel technology and solutions 
provider managing business’ content in global markets mark is a graduate in electrical and electronic engineering  
he started his career as an electronics and computer design engineer before moving into project management at lotus 
development corporation and later as international development director with ashtontate he is responsible for the 
strategic direction of the group
  
john hunter chief executive officer age 46  
appointed 1 september 2008
john hunter is a chartered management accountant and joined sdl in september 2008 prior to this he held a number 
of senior financial and management positions in europe asia and the us within the ici group before joining sdl he 
was chief financial officer of ici paints a leading global decorative business since september 2008 john has been 
chief financial officer of sdl and was promoted effective 1 february 2011 to chief executive officer 
matthew knight chief financial officer age 40  
appointed 14 april 2011
matthew knight took a beng in mechanical engineering at imperial college in 1993 he is a member of the institute of 
chartered accountants of england and wales and qualified with deloitte in 1996 matthew has extensive experience of 
the software and services industry and worked for logica plc where he held a variety of uk and international roles – 
most recently northern  central europe chief financial officer sdl annual report and financial statements 2011 
3
directors and corporate governance
49
none of the directors have been accused of or been 
reported as acting in breach of professional conduct 
by any regulatory or statutory authority
david clayton senior independant director age 55  
appointed 16 december 2009 – reappointed 
23 april 2010
david clayton is currently group director of 
strategy and corporate development for sage 
plc after a career in senior executive roles at a 
number of international technology companies 
he joined bzw in 1995 where after its merger 
with csfb in 1997 he was managing director 
and head of european technology research until 
2004 he joined the sage board in june 2004 
as a nonexecutive director before taking up his 
current executive role in october 2007
chris batterham age 56  
appointed 15 october 1999 – reappointed  
23 april 2011
chris batterham qualified as a chartered 
accountant with arthur andersen and has 
significant experience in the technology based 
business environment including the flotation 
of unipalm on the london stock exchange 
currently working on the boards of a number of 
companies including the risk advisory group 
office 2 office plc iomart plc and eckoh plc as 
chairman chris brings a wealth of experience in 
the strategic development of companies within 
the it sector
joe campbell age 53  
appointed 1 july 2005 – reappointed  
24 april 2011
joe campbell was ceo of trados for the year 
before its acquisition by sdl in july 2005 when 
he joined the board as a nonexecutive director 
prior to this he was coo of imanage a publicly 
traded company on the nasdaq and is currently 
on the board of sierra systems group inc an it 
and management consulting services company 
he adds a considerable level of expertise in 
enterprise software sales and brings years of 
experience of the us financial markets and ma 
activity 
nonexecutive directors
mandy gradden age 44 
appointed 30 january 2012
mandy gradden is currently executive vp and 
cfo at the privately held retail technology 
company torex retail holdings ltd she is a 
chartered accountant and was previously group 
finance director at the ftse 250 business and 
technology consultancy detica prior to its 
acquisition by bae systems 
john matthews age 67  
appointed 12 june 2001 – reappointed  
23 april 2011
john matthews fca joined the board in 2001 
he is senior independent director of diploma plc 
and acting chief financial officer at aurelian oil 
and gas plc he has previously been chairman 
of regus group plc and of crest nicholson plc 
and was a managing director of county natwest 
and deputy chairmandeputy chief executive of 
beazer plc 
jane thompson age 52  
appointed 16 december 2009 – reappointed 
23 april 2010
jane thompson is cofounder of hayfield group 
a market leading executive coaching business 
specialising in working with senior executives 
primarily in ftse 100 companies her coaching 
work is mainly in the financial media telecom 
oil and retail sectors prior to establishing 
hayfield group ms thompson spent more 
than 15 years in the city using her fluency in 
german and french to advise leading european 
financial institutions on investment strategy and 
economics 50
operating and financial review
performance overview
2011 was a year of significant strategic 
and operational progress for sdl record 
revenue and operating profits were achieved 
together with a strong performance in 
cash generation after making a small but 
strategic acquisition of calamares during 
the year now sdl media manager the 
company finished the year having made an 
offer for alterian the alterian transaction 
completed on 27 january 2012 and adds 
two new businesses to the portfolio sdl 
campaign manager and analytics and 
sdl social intelligence all businesses 
had positive revenue growth in 2011 with 
the content management business the 
star performer in growth terms delivering 
constant currency revenue growth of 19  
innovation is core to the sdl business and four significant 
new products were released in 2011
•	 sdl tridion 2011 the new version of our web 
content management technology with new mobile 
targeting and personalisation capabilities sdl tridion 
2011 is rated as a leader by forrester and in gartner’s 
magic quadrant
•	 sdl trados studio 2011 a new version of our leading 
desktop translation product with new collaboration 
and efficiency features
•	 sdl live content 2011 a stepchange enabling 
product which automates the production of smart 
interactive product and technical documentation
•	 sdl easy translator which enables text to be 
translated instantly from any document and realtime 
chat across social networking sites in 60 languages
geographically north america was the strongest 
growth region in 2011 the demand environment was 
more mixed in europe given some individual country 
uncertainties in the region but we continued to deliver 
positive growth making positive progress in some areas 
like the nordics against a planned investment strategy 
growth in asia was impacted by natural disasters in japan 
and thailand but the business invoked contingency 
plans to ensure continued operation and made excellent 
progress in adding new customers in the region in 2011 
further diversifying the customer base and making some 
important foundation sales in our technology businesses 
emerging consumer markets such as asia and south 
america remain very significant growth opportunities for 
sdl and we have continued to build up our infrastructure 
to address these markets
these factors saw revenue growth of 13 driven by 
underlying organic growth at constant currency of 12 
2 growth from acquisitions and a 1 decrease due to 
currency effects
strong underlying organic growth across the technology 
businesses combined with a full year of the 2010 
language weaver and xopus acquisitions has increased 
total technology revenue from 39 of sales in 2010 to 
41 of sales in 2011 growth in technology has been 
supported by sdl’s strong investment commitment 
focusing on strategic market innovations and product vision 
via a targeted research and development programme 
market opportunity in the technology businesses remains 
operating and financial review sdl annual report and financial statements 2011 
3
directors and corporate governance
51
very significant and we expect it to be further enhanced 
by the complementary nature of the alterian acquisition 
we are committed to maintaining appropriate levels of 
investment to fully exploit these opportunities in future 
whilst continuing to deliver profitable growth
overall group operating margin before amortisation was 
broadly stable at 173 2010 174 excluding language 
weaver which has attracted strategic investment in 2011 
group operating margin was 189 2010 180 
cashflow from operations was £326 million 2010 
£271 million average dso was maintained against an 
increased debtors balance which minimised working 
capital outflow and contributed towards improved cash 
generation during the year profit to cash conversion was 
very strong at the end of 2011 we had £704 million 
of cash on the balance sheet which combined with £20 
million of undrawn revolving credit facilities provided a 
robust base for the completion of the alterian acquisition 
on 27 january 2012
revenue
revenue growth was well balanced across the portfolio 
with doubledigit headline revenue growth across each 
operating segment a creditable performance in a mixed 
global economy with regional and segment demand 
variation the diverse mix of regions industry verticals and 
customers served continues to provide protection against 
any one specific demand impacting factor group revenues 
by reporting segment are shown below and a geographic 
split by destination shown on the charts on page 52
headline revenue growth of 13 was primarily driven 
by underlying organic growth at constant currency of 
12 with the remainder driven by acquisition effects of 
2 from a full year of the 2010 language weaver and 
xopus acquisitions and 1 due to currency translation 
performance in content management was particularly 
strong with constant currency revenue growth of 
19 driven by demand for tridion 2011 and continued 
penetration of structured content products into the 
burgeoning technical documentation marketplace 
increased cross selling activity has also underpinned 
growth 
given new business wins the customer intensity profile 
continued to improve in 2011 the 20 largest customers 
contributed 29 of revenue in 2011 2010 34 with 
no single customer contributing more than 5 of group 
revenues key account management remains a priority 
investment area as we continue to scale our capability to 
match the global growth needs of our largest customers 
we believe that sdl is uniquely positioned with a 
compelling product and solution set that enables global 
businesses to engage with their customers increase their 
brand equity accelerate new product innovation into 
global markets and drive their global revenues more 
customers than ever before are embracing the global 
information management vision demonstrated by rising 
cross leveraged sales of multiple sdl products and 
solutions 
in 2011 we continued to expand our presence by vertical 
sector in 2011 there were eight sectors that contributed 
more than £100 million revenues 2010 7 including 
information technology healthcare and pharmaceuticals 
communications and financial services
the geographical split of revenue by destination is shown 
on the charts on page 52 demand was strongest in 
north america which saw an increase from 46 of sales in 
2010 to 47 in 2011 the rest of the world saw a decline 
from 12 of sales in 2010 to 10 of sales in 2011 given 
the transitory demand effects in asia from the japanese 
tsunami
we continue to invest in expanding our global 
infrastructure with an emphasis on emerging consumer 
markets in asia and south america the resilient us market 
and the nordics where economies are stronger and 
recovery more pronounced 
23
2010 22
59
2010 61
18
2010 17
language services
language technologies
content management technologies
analysis of revenue by segment 52
performance by segment
for management purposes the group is organised into 
business units based on their products and services and 
has three reportable operating segments
content management technologies 
total segment revenue grew by 17 comprising 2 
foreign exchange a negligible effect from acquisitions and 
19 underlying organic growth at constant currency 
structured content management has capitalised on its 
2010 momentum and has achieved excellent growth 
in 2011 in asia we completed some important deals 
in a relatively immature market for structured content 
products we are well positioned to take advantage of any 
growth in this market sdl livecontent 2011 was released 
during the year which is a stepchange enabling product 
which automates the production of smart interactive 
product documentation we believe that sdl offers the 
most complete endtoend solution for creating and 
managing user documentation vital to the endtoend 
user experience
sdl web content management has also continued to 
perform well particularly in north america further 
building position and accelerating demand in a number 
of vertical sectors including financial services the new 
tridion 2011 product launched in january 2011 included 
a fully integrated personalisation and targeting capability 
from our acquisition of fredhopper tridion 2011 is rated 
by both forrester and gartner as a leader and has gained 
significant additional traction in the market building 
on the established reputation of tridion the web 
content management offering was further enhanced 
by a small strategic acquisition calamares now sdl 
media manager which offers a cloudbased enterprise 
solution for video and other rich media assets this new 
capability now branded sdl media manager is fully 
integrated with tridion 2011 and supports a broad range 
of media systems and devices including web mobile 
internet protocol television iptv and various social 
media platforms 
geographic split of sales by destination
84
118
336
2010
369
93
96 100
338
2011
389
77
uk
europe
usa
canada
rest of world
84
118
336
2010
369
93
96 100
338
2011
389
77
uk
europe
usa
canada
rest of world
operating and financial review sdl annual report and financial statements 2011 
3
directors and corporate governance
53
new deals in 2011 included compassion international 
gamestop mcb group sharp eva air abu dhabi airport 
company brother life technologies corporation osisoft 
tibco software inc and mattel
language technologies
total segment revenue grew by 18 comprising 
1 foreign exchange 11 from acquisitions and 8 
underlying growth at constant currency 
demand in the desktop business grew most strongly 
benefiting in the second half from the release of the 
sdl trados studio 2011 product with innovative new 
efficiency and collaboration features even higher levels of 
translation productivity can be realised by our freelance 
and enterprise user base we continue to invest in building 
our asia presence where some important foundation sales 
have been achieved and the pipeline for 2012 is strong 
language weaver is now integrated into the business unit 
and has achieved strong sales growth over the equivalent 
period last year with significant expansion of enterprise 
saas revenue
new clients in 2011 included agip alfa laval ab nordea 
bank denmark tencent inc ricoh company ltd and 
panasonic business services co ltd
language services 
2011 was another year of strong revenue growth and 
good margin performance for this segment headline 
revenue growth of 9 was achieved comprising 1 
foreign exchange and 10 underlying growth a constant 
currency 
north america was a very strong growth market we 
also continued to invest in growing our asia businesses 
which suffered transitory demand effects following natural 
disasters in the region but continued to effectively build 
out customer base significant new client wins during the 
year included marks  spencer hotelde ag semcon 
springer healthcare ltd kosan crisplant the business 
remains highly profitable and cash generative 
gross margin
the group’s gross margin improved to 58 in 2011 an 
increase from 57 in 2010
the increase reflects the growing proportion of 
technology sales which has increased from 39 in 2010 
to 41 in 2011 the technology businesses have higher 
gross margins compared to language services this 
continues the trend seen in recent years during which the 
business mix has evolved more towards technology 
language services gross margin was unchanged in 
2011 compared to 2010 as the business continued to 
effectively manage its global sourcing and network relative 
to demand increase the business deploys significant 
inhouse translation resource and operates a dynamic 
resourcing model to continually optimise the balance 
between internal and external resource through natural 
demand cycles supporting gross margin
administration expenses
in 2011 administration costs excluding amortisation were 
£942 million 2010 £807 million the increase of £139 
million includes £66m of incremental costs from a full 
year of overheads for language weaver and xopus which 
were both acquired in the middle of 2010
the underlying cost has increased by 9 which compares 
to organic revenue growth of 12 during the year cost 
increases during the period relate to expansion initiatives 
including key account and regional sales management 
growth in asia expanding sales and marketing for 
content management technologies and continued 
investment in machine translation technologies additional 
investment is concentrated on growth phase businesses 
and geographies 54
included in administration expenditure is research and 
development expenditure of £148 million an increase 
of 8 from 2010 expenditure of £136 million four 
significant new product launches were made during the 
year including two in content management technologies 
sdl tridion 2011 and sdl live content 2011 and two 
in language technologies sdl trados 2011 and sdl 
easy translator these are important innovations for 
sdl which we believe deliver further added value to our 
customer base
development costs have been reviewed and the board 
remains of the opinion that capitalisation criteria under 
international accounting standard ias 38 are not met 
and consequently no development costs are capitalised 
on the balance sheet the board will continue to evaluate 
development costs against the requirements of ias38 and 
the evolving nature of the business
at the end of 2011 headcount was 2373 compared 
to 2159 at the end of 2010 headcount increases were 
aligned with expansion initiatives outlined above 
employee related costs are the most significant element 
in the total cost composition of the group and account 
for 71 of group overheads 2010 70 the next 
most significant elements are the cost of facilities and it 
infrastructure
intangible assets representing intellectual property rights 
ascribed to certain of the group’s software and customer 
relationships arising from acquisitions are amortised 
between 5 and 15 years and the carrying value is formally 
reviewed on an annual basis to assess whether there are 
indicators of impairment the intangible amortisation 
charge in 2011 was £59 million 2010 £66 million 
the reduction is caused by the majority of the trados 
intangible asset becoming fully amortised in 2010 given 
the high degree of integration of acquisitions intangibles 
and goodwill were allocated to four cash generating 
units “cgus namely language services language 
technologies web content management and structured 
content management the 2011 impairment review did 
not result in impairment of any of the cgus the full detail 
of the impairment review is explained in note 12 to the 
accounts 
07
08
09
10
11
145
161
174
174
173
operating margins
before amortisation of intangible assets
07
08
09
10
11
1774p
2499p
2905p
3470p
3823p
development in fully
adjusted eps year on year
operating and financial review sdl annual report and financial statements 2011 
3
directors and corporate governance
55
net operating margin
the net operating margin expressed as profit before tax 
and amortisation of intangibles divided by revenue is an 
important measure of expenditure efficiency relative to 
revenues strategic investments have resulted in a broadly 
stable net operating margin at 173 2010 174 
excluding language weaver one of the group’s signalled 
strategic investments group net operating margin was 
189 2010 180 profit before tax as a percentage of 
revenue was 147 2010 142
profit before tax and amortisation of intangibles pbta 
is a primary measure used externally by the investment 
community growth in the business has driven a significant 
increase with 2011 pbta of £397 million comparing to 
£354 million in 2010
the chart on the left facing page shows net operating 
margin development year on year
earnings per share
earnings per share eps is a primary performance measure 
in sdl as the board views there is strong correlation 
between eps growth and long term improvement in total 
shareholder return tsr
eps is a key measure in the long term incentive plan ltip 
scheme approved on 20 april 2011 eps growth of at least 
inflation measured by the consumer price index plus 
3 is required for full vesting to occur in addition a tsr 
performance of at least double the benchmark ftse 250 
index excluding investment companies is required for 
ltips to fully vest the use of a combination of eps and 
tsr ensures the alignment of investor returns to senior 
management reward a fundamental principle for an 
effective remuneration system
earnings per share when adjusted for amortisation 
of intangibles increased by 10 to 3822 pence the 
deferred tax benefit associated with the amortisation of the 
intangible fixed assets of £16 million 2010 £17 million 
has been adjusted in this calculation of eps basic earnings 
per share was 3272 pence 2010 2839 pence
the development in fully adjusted eps year on year is 
shown in the chart on the left facing page
financing costs
interest costs in 2011 amounted to £02m 2010 £01m 
this was attributable to the full year interest cost of the 
finance lease arrangements acquired with language 
weaver halfway through 2010 the group had no external 
borrowing throughout 2011
infrastructure and acquisition integration
our global infrastructure combined with effective internal 
operating systems allows us to service our clients around 
the globe when opening a new network office or making 
a new acquisition achieving commonality of processes 
systems and operating procedures is of paramount 
importance 
the calamares acquisition this year has been fully 
integrated in accordance with established practice 56
the group’s capital structure is as follows   
2011
£’000
2010
£’000
net cash note 20 70408 46628
total equity attributable to equity holders of the parent 217832 195512
capital employed 147424 148884
cash flow
the cash flows from operating activities were £326 million 
2010 £271 million this increase of 20 represents 
strong performance in an economic environment where 
strong free cash generation is an important operational 
priority the group continues to demonstrate sound 
intrinsic cash generation and a high profit to cash flow 
conversion ratio 
borrowing facilities
the committed facilities reduced to £15 million in the 
year in line with the original facility agreement in 
order to maintain financial flexibility the board entered 
into negotiations to extend the existing facility back to 
£20 million until february 2014 these negotiations 
were completed during the year at the same terms 
and conditions as the original facility which the board 
considered to be effectively priced the maintenance 
of this facility gives more flexibility to selectively pursue 
potential acquisitions and strategic growth initiatives the 
board continues to be averse to operating with high levels 
of financial leverage which it considers to be a prudent 
stance given the global economic conditions and has used 
the facility to partly fund the acquisition of alterian plc 
the board believes that the strong cash generative nature 
of the underlying business will allow repayment of the 
facility prior to the end of the facility agreement thereby 
reducing financial leverage of the group in line with the 
board’s prudent stance on operating leverage
impact of acquisitions
the board continued to invest in machine translation 
and expansion of the authoring community in structured 
content following the acquisitions of language weaver 
and xopus in 2010 machine translation is gaining 
traction particularly as a software as a service model 
language weaver continues to be dilutive in 2011 as we 
made planned investments to further scale in line with 
our strategy the business continued to make strategic 
acquisitions that provide leading edge technology to our 
clients the acquisition of sdl media manager formerly 
calamares during the year adds a cloudbased platform 
that allows enterprises to centrally compose enrich 
publish and distribute video and other richmedia assets 
the acquisition of alterian plc which completed in january 
2012 brings to the sdl offering a leader in marketing 
analytics social media monitoring and campaign 
management the board believes that the product 
enhancements offered through the strategic acquisitions 
continues to improve the excellent platform of endtoend 
content management solutions for our clients the board 
is committed to fully invest in the alterian business as we 
believe the growth opportunity for marketing analytics 
and social media is very compelling as such the alterian 
business is anticipated to be dilutive to the sdl margin in 
2012 post restructuring costs
derivatives and other financial instruments
the group has cash and shortterm deposits of varying 
durations to fund its working capital needs and other 
financial assets and liabilities such as trade debtors and 
trade creditors arising directly from its operations the 
group’s policy continued to be that no active trading 
in financial instruments will be undertaken within the 
operating units and all decisions on use of financial 
instruments will be taken at group level under the 
direction of the chief financial officer
operating and financial review sdl annual report and financial statements 2011 
3
directors and corporate governance
57
pricing under the current £20 million borrowing facility 
is based on a 085 to 140 margin on london or 
equivalent interbank market rates according to the 
advance date which rate applies between the 085 
 14 margin is dependent on the net borrowings to 
ebitda ratio of the group on the date of the advance this 
remains an intrinsically attractive facility 
under the credit facility agreement sdl is subject to 
certain financial covenants which are required to be 
continually monitored these covenants relate to ebita 
borrowing costs net cash flow debt service liability 
and gross debt ebitda the group is also required to 
maintain a percentage of its cash within a charging group 
of relevant group subsidiaries since entering into the 
facility agreement and during 2011 sdl has complied with 
all of these covenants
the main risks arising from the group’s financial 
instruments are counterparty risk interest rate risk 
liquidity risk and foreign currency risk the board reviews 
and agrees policies for managing each of these risks as 
part of its risk register review the broad policies and 
strategies on these risks are summarised below 
counterparty risk
the group holds cash deposits in multiple currencies 
principally gb pound us dollar and euro in a range of 
financial institutions the main counterparty risk from a 
bank deposit perspective is with rbs and its affiliates the 
group maintains an active dialogue at a senior level with 
rbs about the organisation’s strategic development since 
the changes in shareholder structure through formal 
meetings which review every aspect of the business 
relationship these discussions have been satisfactory in 
2011 the group has continued to monitor interest rate 
conditions in each territory in which it operates to seek to 
maximise return on invested cash whilst taking minimal 
risk on deposit security which has been the primary driver 
of cash investment decisions and will remain so as long as 
the global economy exhibits signs of any fragility
interest rate risk
the group had no interest rate risk on borrowings as 
it has had no external facility borrowings outstanding 
at any point during 2011 the drawdown against the 
committed facilities in 2012 to fund the alterian acquisition 
will expose the group to interest rate risk the committed 
facilities that the group holds with rbs link interest rate to 
the libor or equivalent rate the group is not required 
to maintain any interest rate hedge against this facility 
and therefore does not do so debt market conditions and 
competitive market offerings are continually tracked and 
monitored 
the group maintains cash deposits denominated in key 
operating currencies including gbp pound us dollar 
euros and yen to ensure financial flexibility to finance 
working capital requirements fund growth initiatives 
projects and strategic development opportunities 
these deposits are affected by movements in interest 
rates and the group seeks to match cash surpluses to 
actual operational requirements where possible via a 
comprehensive process to effectively manage funding 
of local entities the group continues to value security 
of deposits over absolute commercial return avoiding 
institutional and territorial risk and placing emphasis on 
secure relationship banks the group has placed its cash 
mainly in secure deposits of varying durations all less 
than one year all of which are accessible on demand 
the group continues to avoid excessive cash retention in 
subsidiaries and cash balances in subsidiaries have been 
maintained as low as operationally practicable the group 
continues to selectively use dual currency deposits as a 
mechanism to arbitrage up applied interest rates whilst 
taking no deposit security risk this has partially mitigated 
the significant decline in deposit rates on invested cash 
available in the global financial markets    
liquidity risk
free cash flow continues to be a priority for the board in 
order to maintain a high level of stability and opportunity 
for strategic investments in order to achieve high free 
cash flow the board focuses on management of working 
capital including maintenance of strong credit control on 
receivables active tracking of work in progress operational 
expenditure and capital investment controls the group 
uses an average metric on dso to generate consistent 
improvement in receivables management over time
the ratio of capital expenditure to revenue was 17 of 
revenues in 2011 13 of revenues in 2010
the significant capital expenditures were payments in 
accordance with the microsoft enterprise agreement 
entered into in 2009 investments in it hardware new 
offices and routine replacements of computers as  58
as a work program it also ensures the risk management 
process is a dynamic one that can quickly adapt to market 
or competitive developments and rapidly embrace the 
impact of any acquisitions the group rolled out a new 
code of conduct during 2011 providing a top down 
behavioural framework for all employees any acquisition 
proposals include comprehensive integration planning 
and contingency planning the implication of a much 
more significant shift towards technology revenues 41 
of revenues in 2011 means that roadmap planning 
pipeline development and targeting are given significant 
focus as is risk management around product release the 
board fully recognises that no risk management process 
can eliminate risk but by a comprehensive approach 
that is effectively linked operationally the board believes 
that it has an effective framework for risk management 
that can seek to minimise and mitigate the effect of risk 
crystallisation should it occur the risk management 
process is given more focus in the compliance review on  
page 60 
research and development risk
the board operate a policy of selective investment in the 
operating overheads of the group exercising differential 
management to direct investment towards growth 
opportunities research and development expenditure is 
considered to be critical to maintaining and enhancing the 
calibre of our endtoend product offering as described 
in note 2 to the accounts our policy is only to capitalise 
development expenditure when all the criteria required 
under international financial reporting standards are 
met during the year there has been no capitalisation 
of development expenditures primarily due to the late 
achievement of technical and commercial feasibility in the 
development cycle the development expenditures occur 
against a range of products with some development 
occurring over a relatively short time cycle and some 
over a longer time cycle there were 37 product releases 
in 2011 with the key product launches described in the 
executive chairman’s statement the chief technology 
officer actively monitors the development roadmaps of 
all products together with necessary product integrations 
and development progress is reported to the board the 
board is comfortable that the development expenditures 
are properly accounted for spread across a range of 
robustly monitored products and that this represents 
sound investment
confidence returned to make higher capital investment 
given strong revenue growth there is a full year of 
capital expenditures for the acquired business of 
language weaver which used to operate under finance 
leases progress in managing credit control exposures 
continued to be maintained and average dso in 2011 was 
maintained at 515 days consistent with the 515 days in 
2010 the average metric drives strong commercial process 
to track working capital development every single month 
which is a critical part of continuous improvement
foreign currency risk
the business is exposed to foreign currency movements 
with significant invoicing done in both the us dollar 
and euro this gives rise to shortterm debtors and cash 
balances in us dollar and euros with movements in 
exchange rates impacting the balance sheet the sensitivity 
of the business to movements in key foreign currency rates 
is disclosed in note 23 to the accounts the key sensitivity 
remains to the us dollar where the group has the most 
significant mismatch between revenues and costs 
percentages of euro derived revenues to euro derived 
costs are much more matched where possible the group 
attempts to match cost commitments to revenues in euro 
and us dollar zone economies but this is an ineffective 
hedge yen derived revenues have remained relatively 
stable given the impact of the tsunami but are expected to 
become more significant going forward
following a review of hedging strategy in 2009 the board 
has not hedged its currency exposures the rbs facility 
contains no requirement to hedge 
the board is comfortable with its decision not to hedge 
and whilst it continues to reserve its position on this 
matter this is unlikely to change in the short term it 
consistently monitors balance sheet exposure and global 
economic data for discontinuities in exchange rates 
operational risk
the group maintains a comprehensive risk management 
process this process includes the maintenance of a risk 
register which is reviewed and signed off by both the 
board and the audit committee the risk register assesses 
probability of risk occurrence the potential financial 
impact of a risk should it crystallise and the potential 
reputational impact of the risk this process results in a risk 
management plan that is clearly targeted and prioritised 
operating and financial review sdl annual report and financial statements 2011 
3
directors and corporate governance
59
taxation
sdl is a global business and as such the principal 
determinant of the tax rate is primarily dependent on the 
territorial mix of where operating profits are earned a 
detailed analysis of the taxation charge is included in note 
6 to the accounts 
the headline effective tax charge for the year as a 
percentage of profit before tax is 238 2010 235 
in accordance with the provisions of ias 38 the group has 
recognised deferred tax liabilities in respect of the non 
tax deductible amortisation of intangible assets acquired 
through recent acquisitions this deferred tax position has 
been adjusted for the media manager acquisition made in 
2011 the movement of these liabilities in the period has 
been reflected in the income statement and the effect is to 
provide a tax benefit in the income statement associated 
with the amortisation of those intangible assets 
due to the adoption of ifrs and the requirements of ias 
12 in conjunction with ifrs 2 the schedule 23 tax credits 
available for share options exercised and deferred taxation 
on unexpired options has primarily been recorded in 
equity rather than the income statement the impact 
of this treatment in the current year is to decrease the 
headline effective tax rate by 09 2010 increase of 
31
going concern
in line with uk corporate governance code requirements 
the directors have made enquiries concerning the 
potential of the business to continue as a going concern 
enquiries included a review of performance in 2011 2012 
annual plans a review of working capital including the 
liquidity position and a review of current indebtedness 
levels this review of working capital includes the acquired 
business of alterian and the intended investment plans 
for this business the directors confirm that they perceive 
strong underlying cash generation and therefore 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 accounts
for and on behalf of the board
matthew knight
chief financial officer 60
internal control and risk management
internal control and risk management
identification and control of risk
the executive directors are directly involved in 
management of risk and effective systems are in place 
to identify operational risk these systems depend on 
robust and stable operating procedures which are well 
disseminated and understood by all involved there is 
formal and effective control over the following decision 
parameters by the executive directors
•	 there are delegated expenditure controls in place on 
both financial quantum and duration of commitment 
that require sign off at various levels in the 
organisation including the ceo and cfo these cover 
both operating and capital expenditure
•	 there is a system of reserved powers where matters 
cannot be decided at operating segment level and 
must be referred to group executive management
•	 the group produces carefully considered budgets 
for each operating segment of its business where 
key actions to enable delivery are clearly defined 
and prioritised  group functional plans are also in 
place that must clearly link to operational priorities 
this cohesive planning process gives a clear view of 
key deliverables and critical dependencies that span 
across functions or operating segments maximising 
collaboration in delivery                          
•	 payment processes are appropriately controlled and 
segregation of duty is prioritised so that excessive 
concentration of authority does not reside in any one 
individual
•	 all acquisition related decisions are confined to 
the board and must be referred to the executive 
chairman ceo and cfo by operating segment 
management
•	 there is appropriate and regular cascade of relevant 
information to employees which is logically cascaded 
via leadership the ceo personally gives monthly 
updates on business performance to approximately 
240 managers for cascade a comprehensive 
knowledge series initiative has also been developed 
that informs employees about group processes as 
well as fundamental information about sdl and its 
businesses
•	 all property decisions whether lease or purchase 
require group approval
•	 all technology roadmap decisions require group 
approval 
the identification and management of both strategic and 
operational risk across the sdl group is essential to ensure 
performance against objectives and deliver shareholder 
value the consequence probability of occurrence and 
reputational and financial impact of each risk is considered 
and mapped according to its significance to the group’s 
objectives
the board believes that by managing risk in a dynamic 
way which is truly embedded into our operations we can 
provide a reasonable and not absolute assurance against 
material misstatement or loss we can also be reasonably 
confident that we can manage risk in a way that risk will 
not detract from delivery of our critical strategic objectives 
we are committed to continuous improvement and 
development of our risk management processes 
the board discharges its risk management processes 
through its executive management structure
management structure
there is a formal schedule of matters reserved for decision 
by the board a formal schedule of these is on the 
company’s website executive directors have responsibility 
for specific parts of the group’s affairs and these are 
clearly defined there is a formal executive committee 
consisting of the chief executive officer ceo the chief 
financial officer cfo business segment ceos the 
chief technology officer cto and the chief information 
officer cio which meets regularly to discuss strategic 
and operational matters and associated risks to delivery 
of strategy
the group also has formal structures in place in the 
finance and legal functions
the sdl board reviews the risk register at least once a year 
in addition indepth reviews of specific items of risk are 
conducted as required by the board throughout the year 
whilst overall responsibility for risk management lies with 
the board the identification management and reporting 
of risk is delegated to the audit committee
should these risks occur there are policies decision 
processes and escalation procedures in place throughout 
the business units designed to mitigate the effects sdl annual report and financial statements 2011 
3
directors and corporate governance
61
•	 the hiring process uses an inhouse recruitment 
professional and all key strategic hires are carefully 
profiled against clearly established competency and 
skill set needs to ensure recruitment and retention of 
high quality personnel
•	 there are salary frameworks and hiring approval 
frameworks in place
•	 there are established protocols for contract sign 
off and execution and a formal set of acceptable 
conditions in place for legal contract sign off that 
target liability mitigation
•	 formal segmental management teams are in place 
that are complementary to the group executive team 
who control operational execution and collaboration 
across the group
•	 there is a formal system of accounting policies in 
place that are compliance validated in site visits and 
group audit and available to all in the finance function 
for common application these policies are rolled out 
through formal communication sessions
•	 there is a full system of key account management 
teams in place 
operational risks
description risk mitigation 2011 activity
management of 
succession and 
transition processes 
and group key 
talent management 
and succession 
planning 
inconsistent 
leadership 
inadequately trained 
staff or employee 
attrition that prevents 
delivery of strategic 
business objectives 
the group endeavours to provide 
relevant experience for future 
senior or key roles competitive 
remuneration structures 
including long and short term 
incentives and ensures that 
there are open and transparent 
assessments development plans 
and promotion opportunities that 
encourage employees to want to 
build long term careers with sdl 
hr organisation model reviewed for 
growth and capability
system interruption 
and business 
continuity planning 
and policies for 
dealing with business 
interruption
a significant 
unplanned outage 
that causes a major 
business continuity 
issue 
the group focuses on business 
continuity planning and security 
of its data centre and hosting 
facilities business continuity 
planning embraces home 
working options for those 
that can work from home 
and considers alternative and 
distributed locations in the event 
that a significant office is taken 
out of operation there is strong 
emphasis and focus in business 
continuity plans on how to restore 
normal operations as quickly 
as possible planning helps to 
safeguard sdl’s reputation as 
well as ensuring the company 
meets regulatory and contractual 
obligations
third party suppliers’ contingency 
and back up processes reviewed
crisis simulation exercises run in 
2011
business invoked contingency plans 
successfully after tsunami and 
earthquake in japan and secured 
normal operations
these controls checks and balances provide strong operational linkage to risk management processes 62
description risk mitigation 2011 activity
data protection data 
loss and data security
loss of data or leak of 
critical data
solutions for specific situations 
are being incorporated into a 
systematic process which 
•	 examines sdl’s information 
security risks threats 
vulnerabilities and impacts
•	 addresses unacceptable risks 
with a comprehensive policy 
on control or other form of 
risk treatment and
•	 adopts an overarching 
management process to 
ensure that the information 
security controls continue 
to meet the business’ 
information security needs on 
an ongoing basis
sdl achieved  certification to iso
iec 27001 for the uk 
compliance risk changes made to 
laws regulations or 
standards worldwide 
could adversely 
impact the group’s 
capability or the 
marketability of our 
products
regular reviews ensure 
compliance with group policies 
and applicable laws regulations 
and standards changes in 
legislation are monitored with the 
help of the group’s financial and 
legal advisors where necessary
setting appropriate standards 
of behaviour is essential to 
compliance during 2011the 
refreshed code of conduct was 
rolled out to staff which linked 
directly into our knowledge series 
initiative which is designed to give 
all employees deep understanding 
of the sdl group its business and 
its processes the updated code of 
conduct considers and responds 
to matters raised in the uk bribery 
act 
contract 
management and 
litigation control
customer and 
supplier contractual 
risk exposure
the legal function ensures that 
customer contracts are carefully 
prepared reviewed negotiated 
and approved in line with internal 
policies that have an escalation 
framework in place for referral to 
senior management
the group has strengthened 
its legal function in 2011 with 
appointments to the uk and usa 
teams
strategic risks
acquisitions realising the benefits 
of an investment 
depends upon 
achieving planned 
performance of the 
acquired businesses 
after acquisition and 
successful integration 
into the group
the group has clearly defined 
criteria for suitable acquisition 
targets and substantial due 
diligence including detailed 
review of business plans is carried 
out before any acquisition is 
made the group has extensive 
experience of integrating 
acquisitions and captures this 
knowledge for reuse
in may 2011 the group acquired 
calamares holding bv a video 
asset management company 
based in the netherlands in 
january 2012 the alterian group 
was acquired the integration of 
calamares is complete and formal 
implementation of the alterian 
integration plan is underway
internal control and risk management sdl annual report and financial statements 2011 
3
directors and corporate governance
63
description risk mitigation 2011 activity
maintaining 
technology 
leadership and 
intellectual property 
matters
the group fails to 
develop products to 
keep up with current 
market trends 
or is exposed to 
intellectual property 
dispute
the group invests in research 
and development and has 
well integrated and planned 
innovation roadmaps and 
stringent delivery checkpoints 
the group has a rolling programme 
using outside intellectual 
property counsel to ensure that 
its intellectual property rights 
are appropriately protected by 
law the innovation roadmaps 
and associated investment needs 
are extensively reviewed for each 
twelve month period and formally 
approved 
financial risks
liquidity risk cash reserves and 
working capital are 
not sufficient to 
repay debts as they 
fall due
the group is highly cash 
generative the methodology for 
dealing with liquidity risk through 
strong generation of free cash 
flow is dealt with on page 57 in 
the financial review
there is a continuing emphasis on 
effective billing and credit controls 
which are fully integrated with 
business operations
counterparty risk the principal risk is 
exposure to rbs
the mitigating strategy for this 
risk is covered on page 57 in the 
financial review 
further monitoring and appropriate 
dialogue has taken place with rbs 
and facility conditions have been 
maintained without operational 
consequence to sdl
interest rate risk profit and loss 
and cash effect of 
increased interest 
rates on group 
borrowing facilities 
there were no borrowings in 
2011 the mitigating strategy for 
this risk is covered on page 57 in 
the financial review
financial reporting 
system
inadequate systems 
lead to incomplete or 
delayed reporting
the operational process for 
control over financial reporting is 
led by the chief financial officer 
who works through the finance 
leadership team to ensure there 
are a full suite of policies and 
procedures in place that are 
effectively communicated and 
disseminated to the operating 
units in sdl
compliance is monitored actively 
via site visits and the frameworks 
are controlled and reviewed each 
year to generate progressive 
tightening and continuous 
improvement and to respond to 
any risk management priorities 
or emerging standards full 
audit packages are produced 
for each operating unit which 
comprehensively explain delivered 
results and these are quality 
reviewed by the international 
controller’s team there is full and 
transparent reporting to the audit 
committee of control program 
findings and reporting here is 
fully at the direction of the audit 
committee according to its needs corporate governance report
64
2  governance
leadership
the board is responsible for determining the longterm 
direction and strategy of the group in a framework of 
sound robust corporate governance and throughout 2011 
the board continued to apply the enhanced governance 
and control environment introduced during 2010 
the executive chairman ensures that each board meeting 
has a strong strategic focus and that board members 
are regularly appraised of strategy development and 
execution forecasts corporate developments including 
acquisition and operational and human resource 
implications of strategy the board members are also 
updated on current external and investor sentiment 
the nonexecutive directors bring an external view 
of current best practices to board meetings and 
constructively challenge operational management on 
proposals and scrutinise management performance 
the nonexecutive directors are of sufficient calibre and 
number that their views carry significant weight in the 
board’s decision making the nonexecutive directors 
meet during the year without executive directors or other 
executive management present
the board considers effective communication between 
board members is crucial to leadership and delivery the 
board meets regularly and usually with full participation of 
all board members – see the composition and attendance 
table below 
board composition
in 2011 the board consisted of three executive directors 
and five nonexecutive directors biographical details are 
set out on pages 48 and 49
during the year matthew knight was appointed to the 
board on 14 april 2011 and cristina lancaster stepped 
down on 31 march 2011 jane thompson will not be 
seeking reelection at the 2012 agm
on 28 march 2011 david clayton was appointed as senior 
independent director taking over from john matthews
1  introduction
in the following sections we explain our approach to 
corporate governance and key developments during the 
year the board is committed to compliance with the 
uk corporate governance code 2010 and transparent 
reporting of its compliance position where sdl does 
not fully comply the board provides a comprehensive 
explanation and a clear plan as to what is being done to 
secure full compliance 
the board considers that during the year ended 31 
december 2011 the company complied with all of the 
provisions of the uk corporate governance code 2010 
the code with the exception of a21 which details the 
requirement for a separate chairman and chief executive 
officer changes were made from 1 february 2011 
and reported in the 2010 annual report splitting the 
chairman and chief executive role with mark lancaster 
becoming executive chairman and john hunter chief 
executive officer the board consulted with major 
shareholders on the appointment of mark lancaster 
as executive chairman and they considered it to be 
appropriate given the current strategic and operational 
progress of the group the board will continue to keep 
this under review through its external advisors and 
through dialogue with major shareholders the board 
is guided by shareholder value on this issue recognising 
the importance of making the correct decisions and 
moving in tune with shareholder sentiment and with 
maximum regard for what is best for continuity of strategy 
implementation and execution
the board acknowledges that chris batterham has served 
as a member of the board for more than nine years the 
board views chris batterham as independent in his actions 
and with his unique skills and experience of other software 
companies which coupled with his knowledge of sdl 
makes him a valuable asset in board make up and decision 
making the board asserts his independence on that basis
the board is seeking to appoint another independent non
exectuive director in due course
the board has decided that an annual election of board 
members b71 will be put in place from the 2012 annual 
general meeting 
corporate governance report sdl annual report and financial statements 2011 
3
directors and corporate governance
65
the composition of the board during 2011 and the beginning of 2012 is set out in the table below
board composition and attendance
current directors date appointed board audit committee remuneration committee
mark lancaster 31 january 1992 88 3 2
john hunter 1 september 2008 88 4 2
matthew knight 14 april 2011 66 4 1
david clayton 16 december 2009 88 44 77
chris batterham 15 october 1999 88 44 66
joe campbell 1 july 2005 48  44
mandy gradden 30 january 2012 na  
john matthews 12 june 2001 88 33 66
jane thompson 16 december 2009 78 34 77
directors who stepped down in 2011
cristina lancaster 31 march 2011 12  
attendance by invitation
 
it was stated in last year’s annual report that a new non 
executive director would be appointed during the year 
the search for a candidate whose skills independence 
and knowledge would enhance the existing balance and 
knowledge of the board took longer than anticipated 
the board is now pleased to welcome mandy gradden 
as a non executive as stated in last year’s annual report 
steps have been taken to address the composition of board 
committees during 2011 and the independent component 
was increased where appropriate
although john matthews will not be seeking reelection 
at the 2012 agm sdl wishes to retain access to his 
knowledge and valuable insight to the business  to this 
end john has agreed to render his services as a consultant 
to the board from time to time as required
during 2011 chris batterham relinquished his nomination 
and remuneration committee responsibilities but will 
remain as a nonexecutive director his presence on 
the board maintains continuity and retains his expertise 
and knowledge of the company’s business strategies 
markets competitors and technologies he has valuable 
contributions to the company’s strategy policy making 
and risk assessment
the board intends to make further changes in 2012 to 
meet the balanced board principles this will involve the 
appointment of one additional independent nonexecutive 
director the board believes that this orderly succession is 
in the best interests of shareholders   
the board has agreed a succession planning framework to 
ensure that board tenure is appropriate and encourages 
fresh thinking and new ideas is sufficiently diverse with 
an appropriate mix of general and specialist skills and   
have the necessary level of independence from the sdl 
executive and each other 
without seeking to set a specific goal for female 
representation on the board it remains our commitment 
to maintain a high level of diversity including gender 
diversity within the boardroom appropriate to and 
reflecting the global nature of the company and the 
strategic imperatives the board has agreed upon currently 
there are two female directors out of a total of nine 
board members the board recognises the benefits of 
the right balance of independence skills knowledge and 
experience
the board is aware of the other commitments of its 
directors and is satisfied that these do not conflict with 
their duties as directors of the company the non
executive directors are expected to commit 1224 days 
per annum and the board is satisfied that each commits 
sufficient time to the business of the company changes 
to the commitments of the directors are reported to the 
board effectiveness
specific board responsibilities are set out in a schedule of 
matters reserved for the board and these are available on 
our website wwwsdlcom the matters include
•	 material acquisitions and disposals of assets
•	 investments capital projects and risk management 
policies and
•	 appointments to the board
the board has delegated certain responsibilities to its 
committees whose terms of reference are regularly 
reviewed and are available on the company’s website at 
wwwsdlcom 
the committee memberships are as follows
the audit committee see the audit committee report on 
page 67 is led by david clayton who is group strategy 
and corporate development director for the sage group 
plc has considerable relevant experience and a strong 
governance background the other members are chris 
batterham jane thompson and mandy gradden mandy 
gradden was appointed to the committee on 30 january 
2012 and has the professional accounting knowledge 
defined by the code chris batterham will remain on the 
committee for a handover period after which he will step 
down 
 
the remuneration committee see the remuneration 
report on page 72 is led by jane thompson with david 
clayton joe campbell and mandy gradden as members 
mandy gradden was appointed to the committee on 
30 january 2012 john matthews and chris batterham 
stepped down from the remuneration committee on 1 
august 2011 
the nomination committee consists of david clayton as 
chairman mark lancaster and joe campbell in 2011 
the committee restructured with mark lancaster passing 
the role of nomination committee chairman to david 
clayton and chris batterham and john matthews stepping 
down as committee members on 1 august 2011 and 24 
february 2012 respectively the role of the committee is to 
review the structure size and composition of the board its 
ongoing relevance to the nature of the business identify 
and nominate new board appointment candidates 
evaluate the balance of skills knowledge and experience 
on the board and consider any conflicts of interest that 
may be reported by directors of the company
66
corporate governance report
we continue to be an equal opportunities employer and 
will maintain our merit based approach to recruitment 
sdl has a good record of promoting and appointing 
women to senior positions with women currently holding 
47 of management positions the aim of the board is to 
ensure that sdl has the right balance of skills diversity in 
all forms and experience throughout the company
   
copies of the terms of reference are available on request 
from the company secretary and on the group’s website 
in the investor relations section
induction and professional development and advice
the company has a formal director induction programme 
which was operated during 2011 for matthew knight it 
covers matters such as the operations and activities of the 
group the group’s key financial and nonfinancial risks 
and the role of the board and its committees the director 
receives information about the company’s corporate 
governance practices and procedures and is advised of 
their legal duties and obligations as a director of a listed 
company
board knowledge and training needs form part of the 
board evaluation and the chairman is responsible for 
the development needs of the board ensuring that all 
directors receive continuing training in order that they can 
appropriately perform their duties this is done through 
presentations at board meetings on business matters 
and technical update sessions from internal and external 
advisers and regular updates on changes affecting the 
company and the market in which it operates through 
briefings from senior executives and meetings with key 
advisers
professional advice
directors are given access to independent professional 
advice at the company’s expense when the directors 
deem it necessary in order for them to carry out their 
responsibilities the directors also have access to the advice 
and services of the company secretary who is responsible 
to the board for ensuring that procedures are followed 
and that applicable rules and regulations are complied 
with and that board discussions have effective minutes 
taken with formal records kept of board discussions 
the company seeks to ensure that the directors receive 
appropriate training covering such things as their legal 
obligations as directors and compliance with stock 
exchange rules 
  sdl annual report and financial statements 2011 
3
directors and corporate governance
67
indemnification
the company maintains liability insurance for its directors 
and officers which is renewed annually deeds of 
indemnity are also in force under which the company has 
agreed to indemnify the directors to the extent permitted 
by law and the company’s articles of association in 
respect of all losses arising out of or in connection with 
the execution of their powers duties and responsibilities 
as directors of the company or any of its subsidiaries
evaluation
performance evaluation of the board its committees 
and individual directors takes place on an annual basis 
and is conducted within the terms of reference of the 
nomination committee with the aim of improved 
individual contribution effectiveness of the board and its 
committees
 
the board is committed to continually review its 
effectiveness and is adopting code provision 362 which 
states evaluation of the board of ftse 350 companies 
should be externally facilitated at least every three years  
during 2011 the board changed significantly with further 
changes planned and a new appointment in 2012  due 
to these planned changes in composition of the board a 
decision has been taken to delay an external evaluation 
until after mandy gradden appointed on 30 january 
2012 is able to make a constructive contribution to the 
exercise  it is the intention of the board to undertake the 
external evaluation before the end of the current year
the chairman together with the nonexecutive directors 
evaluate the performance of the other executive board 
members leading to annual salary reviews and bonus 
targets achievement assessment 
the nonexecutive directors have responsibility to perform 
an evaluation of the performance of mark lancaster
3  audit committee
overview
the objective of the audit committee is to promote and 
maintain high standards of corporate and regulatory 
reporting risk management and compliance as 
effectiveness in these areas enhances the performance and 
reduces the risks of the business 
the audit committee is comprised entirely of non
executive directors david clayton chair jane 
thompson chris batterham and mandy gradden on 
1 august 2011 john matthews stood down each of the 
directors on the committee has through their other 
business activities andor professional qualifications 
significant experience in financial matters 
external auditor executive directors senior members of 
management and advisors are regularly invited to attend 
meetings as appropriate 
the audit committee is responsible for reviewing a wide 
range of matters including the halfyear and annual 
accounts and monitoring the controls that are in force 
to ensure the integrity of the information reported to 
shareholders the committee also exercises oversight of 
the financial statements policies and judgements the 
audit committee considers the nature scope results and 
costs of the audit as well as the resources deployed and 
the conduct of the audit the audit committee keeps 
under review the cost effectiveness independence and 
objectivity of the external auditor and has adopted a 
formal written process in this regard nonaudit services 
above £20000 are sanctioned formally by the audit 
committee evaluating the nature of the work and fees 
involved and the materiality of the fees expertise being 
provided is very closely monitored as are any nonaudit 
relationships between the group and the auditor 
  68
activities in 2011
the audit committee met four times during 2011 matters 
considered by the committee included
•	 the internal control program and its execution 
including accounting policies key judgements and 
estimates 
•	 the resource requirements for the group finance 
function 
•	 the integration requirements of past and potential 
acquisitions together with control and reporting
•	 a review of key risks affecting the group 
•	 a strategic tax planning review
•	 monitoring of nonaudit services provided by kpmg 
audit plc the external auditor
•	 approval of processes for prevention of bribery and 
fraud
•	 the review and approval of a strategy for annual 
external audit  review processes both interim and 
annual and consideration of the findings
•	 a review of the requirement for separate internal audit 
function within the group and
•	 monitoring the effectiveness of the whistleblowing 
process where staff may raise concerns about possible 
improprieties in financial reporting fraud or other 
matters of concern 
auditor independence
the committee evaluates the performance of the external 
auditor through committee members’ views and those of 
relevant senior management it is the company’s policy 
to carry out periodic market testing either through bench 
marking or audit tender 
an audit tender was carried out in 2010 when kpmg audit 
plc were appointed
internal control
the committee has a formalised structure of 
reporting by the group auditor which allows for it to 
independently assess the quality of financial reporting and 
representations made in the accounts the committee 
reviews the quality and makeup of the group’s internal 
finance function and the control environment the control 
environment reviews include the chief financial officer 
international controller and senior members of the group 
finance function reporting formally to the committee on 
the completion of the comprehensive program of control 
work initiated by the chief financial officer this includes 
reporting on site visit outcomes which enables the 
committee to formally assess whether control programs 
are delivering 
the company’s approach to monitoring the quality of 
financial reporting and control processes remains under 
ongoing review by the audit committee
copies of the terms of reference are available on request 
from the company secretary and on the group’s website 
in the investor relations section
corporate governance report dialogue with shareholders and views this as an effective 
way to ensure that those representing the shareholders 
with the majority of shares in sdl can engage directly and 
make their issues and concerns known the board seeks to 
respond promptly to shareholder governance enquiries   
in 2011 a series of meetings and consultations between 
institutional shareholders the association of british 
insurers and nonexecutive directors were held to discuss 
executive remuneration in general and specific share 
incentive schemes  a new long term share incentive plan 
was subsequently approved by the shareholders at the 
annual general meeting “agm” in 2011
the board looks to use the agm to communicate with 
private as well as institutional investors and welcomes 
broad participation in this meeting  the chairman chief 
executive officer ceo chief financial officer cfo and 
chairpersons of the audit remuneration and nomination 
committees attend the agm and are available during 
and after formal proceedings to meet with any attending 
shareholders  notice of the agm together with any related 
documents are made available to shareholders on the 
company’s website or mailed to them at least 21 days 
before the meeting  the agenda will always propose a 
separate resolution on each substantially separate issue 
and will always contain a resolution relating to the report 
and accounts  shareholders are able to vote electronically 
thorough our registrars’ website  the level of votes 
lodged on a resolution is made available on a regulatory 
information service and on the company’s website at 
wwwsdlcom
details of the 2012 agm are set out in the notes 
accompanying this annual report
sdl annual report and financial statements 2011 
3
directors and corporate governance
69
the board considers effective communication with 
shareholders whether institutional investors private 
or employee shareholders to be extremely important  
the group’s aims are to be open and transparent in 
communicating its business strategies and performance 
promoting credibility and confidence amongst all its 
stakeholders
the company reports formally to shareholders when its 
full year and half year results are published  these results 
are posted on sdl’s website wwwsdlcom  at the same 
time the executive directors give presentations on the 
results to institutional investors analysts and the media 
in london and other international centres  the company 
also holds investor days for its institutional investors and 
analysts  these conferences are a good mechanism to 
highlight current matters of shareholder interest and reach 
potential new investors and broaden the shareholder 
base  targeted communication programs are suggested 
by the group’s financial and public relations advisors  
the outcome of any shareholder or external stakeholder 
dialogue including with governance institutions is 
communicated to the board in order to enable a broad 
understanding of the views of major shareholders and 
external commentators about the group
mark lancaster john hunter and matthew knight meet 
with both existing and potential institutional investors 
regularly during the financial year and explain the strategy 
and objectives of the group and the financial results 
where appropriate the executive directors and non
executive directors also attend investment conferences 
which provide access to multiple investors to understand 
firsthand the strategy positioning and progress of the 
company  the board promotes an effective and open 
investor relations 4 statutory information
70 sdl annual report and financial statements 2011 
4
statutory information
71 72
directors’ remuneration report
72
information not subject to audit
remuneration committee
overview
the remuneration committee is comprised entirely of 
independent nonexecutive directors jane thompson 
chair david clayton joe campbell and mandy gradden 
who joined the committee on 30 january 2012 chris 
batterham and john matthews stood down on 1 august 
2011 the executive chairman chief executive officer 
‘ceo’ chief financial officer ‘cfo’ internal and 
external advisers may be invited to attend committee 
meetings as and when appropriate
the committee ensures that sdl properly aligns the 
potential total remuneration of the executive team with 
the longer term interests of shareholders  this is achieved 
through a formal process which includes alignment and 
review of the company’s and the individual’s performance 
objectives  remuneration schemes are framed to attract 
and retain talented individuals 
no committee members have a financial interest in the 
company other than in their capacity as shareholders 
the committee makes recommendations within agreed 
terms of reference on overall remuneration packages for 
executive directors including the chairman ceo cfo 
company secretary and other senior executives  the 
board itself determines the remuneration of the non
executive directors and also has responsibility for electing 
persons to the board  the remuneration committee does 
not have authority to employ or dismiss directors  
activities during 2011
during 2011 the committee met seven times activities 
during the year included
•	 agreeing the remuneration packages for mark 
lancaster and john hunter following their 
appointment as executive chairman and chief 
executive officer on 1 february 2011
•	 a review of performance criteria and subsequent 
release of shares maturing under the sdl plc 2006 
long term share incentive plan 
•	 review and approval of grants under the sdl share 
option scheme 2010 and awards under the sdl long 
term share incentive plan 2011 “the 2011 plan” 
the 2011 plan approved by shareholders at the agm 
in april 2011 has been updated to reflect current law 
and market practice and still deploys relative tsr and 
an eps underpin as performance measures 
•	 invitations to participate in the sdl save as you earn 
scheme “saye” approved by shareholders in 2008 
were made to sdl employees in both the uk and the 
netherlands in 2011 work is underway to extend this 
scheme to employees in the usa and it is anticipated 
that invitations will be extended in 2012 to employees 
in the netherlands the uk canada and the usa 
•	 scoping and agreeing performance targets in relation 
to the 2012 executive bonus scheme the focus of 
the bonus scheme for 2012 is on maintaining the 
balance between incentivising financial performance 
and managing risk whilst returning value to the 
shareholders 
copies of the terms of reference are available on request 
from the company secretary and are also on the group’s 
website in the investor relations section
further details of the group’s policies on remuneration 
service contracts and compensation payments are 
given below
remuneration committee advisors
the committee obtains advice from various sources 
as required to ensure it makes informed decisions the 
committee’s advisors in 2011 were
•	 cjw remuneration consultants for the 2011 ltip 
which was designed to reflect current law and market 
practice and approved at the agm in 2011 and 
•	 pricewaterhousecoopers on total shareholder return 
“tsr” and earnings per share “eps” performance 
testing for ltips
remuneration policy
the committee seeks to ensure that the remuneration 
packages of sdl’s executive directors and its senior 
executives are appropriate for the functions performed it 
closely monitors market developments and takes external 
advice as appropriate the company has a remuneration 
policy that balances the need to attract and retain high 
quality employees whilst taking into account current best 
practice and shareholder expectations
directors’ remuneration report sdl annual report and financial statements 2011 
4
statutory information
73
sdl annual report and financial statements 2011 
73
the underlying policy for executive directors’ 
remuneration remained unchanged during 2011 the main 
tenets of which are
•	 a significant proportion of remuneration is dependent 
upon the achievement of specific challenging financial 
targets
•	 executives are rewarded for success and steps are 
taken to prevent rewards for failure
•	 the focus is on sustainable shareholder value and 
aligning executive remuneration with shareholder 
interests 
basic salary and benefits
the executive directors’ reward packages consist of 
fixed eg base salary pension healthcare and variable 
eg bonus and long term incentive plan elements 
the variable element emphasises the link between 
performance and pay
the base salaries of mark lancaster and john hunter were 
considered by the committee in connection with their 
respective changes in responsibilities announced on 17 
january 2011 the salary and bonus structure for matthew 
knight who joined the board as chief financial officer on 
14 april 2011 was also approved by the committee
a new long term incentive plan 2011 “ltip” was 
approved by the shareholders at the agm in april 2011 
this plan retains the measures of tsr and eps with tsr 
now the primary measure 100 outperformance against 
the ftse 250 index excluding investment companies will 
be required to achieve full vesting in addition adjusted eps 
must increase on average by inflation  3 per annum for 
full vesting to occur with inflation measured by reference 
to the consumer prices index 
in accordance with the new ltip rules mark lancaster and 
john hunter were awarded ltip shares equivalent to 150 
of salary and matthew knight 100 of salary
the executive directors do not however participate in 
the share option scheme other benefits over and above 
salary and bonus principally comprise a car allowance car 
fuel if applicable and private healthcare 
the details of individual components of the directors’ 
remuneration package and service contracts are discussed 
more fully below
2011 performance related bonus
the 2011 scheme is based upon the achievement of group 
revenue and profit before amortisation and taxation 
“pbta” against the budget formally approved by the 
board for the year  no bonus is payable unless pbta is in 
excess of 95 of that of the preceding year
to deliver a maximum bonus award actual performance 
against both of these measures must be outperformed 
by 10 on each measure with a 50 weighting applied 
to each and for the cfo he must also deliver 100 of 
his personal objectives the cfo’s bonus is determined 
by the multiplication of a company performance factor 
by his personal objective delivery to attract a maximum 
bonus payment a company performance multiplier of two 
must be determined by the committee with the cfo also 
delivering 100 of their personal objectives to attract 
a par bonus payment a performance multiplier of one 
must be determined by the committee with the cfo also 
delivering 100 of their personal objectives the 2011 
bonus award for matthew knight was determined by the 
committee against this framework
the chairman and chief executive officer are rewarded 
purely on the company performance multiplier and were 
granted a bonus award on this basis 
par award  max award
mark lancaster 60 120
john hunter 50 100
matthew knight 50 60
mark lancaster’s and john hunter’s awards were 
determined purely on the basis of revenue and pbta 
performance with the 10 outperformance applied in a 
consistent way to the way it is applied to other directors 
these arrangements are designed to ensure that the group 
achieves its strategic objectives and maximises shareholder 
value creation 
as reported in the annual report 2010 the committee 
after discussions with institutional shareholders made 
an exceptional and oneoff conditional award to mark 
lancaster on 17 january 2011 of 141510 sdl shares the 
first tranche of 47170 shares has vested and is due to be 
transferred to him in march 2012 74 74
2012 performance related bonus
the 2012 scheme for the executive chairman and the chief 
executive officer will be based upon the achievement of 
group revenue and profit before amortisation and taxation 
“pbta” against the budget formally approved by the 
board for the year to deliver a maximum bonus award 
actual performance against both revenue and profit must 
be outperformed by 10 on each measure with a 50 
weighting applied to each the par and maximum award 
will be 75 and 120 for the executive chairman and 
75 and 100 for the ceo respectively
the 2012 scheme structure for the cfo is unchanged 
from 2011 with the bonus payable to be determined by 
performance against relevant budget multiplied by a 
percentage achievement factor on personal objectives see 
above 
long term incentive plan
the previous ltip “2006 plan” was adopted by sdl 
shareholders on 26 april 2006 and it expired for the 
purposes of new awards on 26 april 2011 ie after five 
years from its adoption date the plan permitted awards 
of up to 100 of salary per annum to senior executives 
including executive directors awards vest after three 
years subject to earnings per share and comparative tsr 
targets which are given on page 75
a new long term incentive plan scheme “2011 plan” 
was approved by shareholders at the annual general 
meeting on 20 april 2011 this scheme retains total 
shareholder return and eps as primary performance 
conditions following a careful analysis of market practice 
in the ftse 250 and sdl’s business objectives and 
aspirations the design of the new ltip focuses future 
performance on relative tsr compared to the ftse 250 
index excluding the investment trust companies with a 
secondary underpin eps measure ensuring real growth in 
earnings over the performance period the main elements 
of the 2011 plan are
•	 the performance period will not be less than three 
years
•	 there will be no retesting of awards if the 
performance conditions are not met by the end of the 
performance period
•	 the plan duration will be ten years but with an 
intention of reviewing to ensure the plan remains 
appropriate
•	 the maximum individual annual limit in terms of the 
value of shares to any participant will be restricted to 
150 of basic salary
•	 subject to meeting the performance conditions the 
plan will permit the satisfaction of awards in due 
course by either the issue of new shares within the 
abi dilution limits or the transfer of shares bought in 
the market via the current ebt or a combination of 
the two
•	 the plan will be open to both uk and overseas 
directorsexecutives excluding nonexecutive 
directors and will contain provisions permitting 
the amendment of plan rules where necessary 
to comply with overseas regulations subject to 
compliance with the individual limit and the dilution
ebt limits
•	 the delivery of awards subject to meeting the 
performance conditions the individual limit and the 
dilutionebt limits can be met by either conditional 
deferred share awards nilcost options or forfeitable 
shares
ltip awards in 2011 were made under ltip 2011 plan rules directors’ remuneration report sdl annual report and financial statements 2011 
4
statutory information
75
sdl annual report and financial statements 2011 
75
summary of performance criteria for the ltips
2006 plan
 
closed for new awards 
see below for more details
2011 plan
 
current 
see below for more details 
maximum award 
 of basic salary
100 150
performance period three years
if the tsr criterion below is not met the 
award will lapse 
not less than three years
no part of any award shall vest unless 
both the tsr and eps conditions below 
are met
tsr initial hurdle based on the company’s 
comparative performance to be at least 
the median compared to the comparator 
group see below for more details at 
the end of the initial three year period 
from the granting of the ltip reward if 
this median position is not achieved then 
no shares can be released irrespective of 
eps growth 
tsr must at least match that of the ftse 
250 index over the performance period 
eps providing the tsr performance condition 
above has been achieved the percentage 
of ltip shares that will be released is 
dependent on the growth in eps as 
follows 
•	 100 release if the annual growth 
in eps over the three years exceeds 
25 compounded
•	 25 release if the annual growth in 
eps over the three years exceeds 10 
compounded
•	 straight line vesting between 25 
and 100
eps must increase by at least inflation  
3 per annum during the performance 
period by reference to the consumer 
prices index 76
directors’ remuneration report
2006 plan
 
closed for new awards 
see below for more details
2011 plan
 
current 
see below for more details 
performance 
conditions
•	 the initial performance hurdle is a total 
shareholder return calculation based on 
the company’s comparative performance 
against the companies constituting the ftse 
software and computer services index 
the “comparator group” this requires 
the company’s comparative performance 
to be at least the median compared to 
the comparator group at the end of the 
initial three year period from the granting 
of the ltip reward if this median position 
is not achieved then no shares can be 
released irrespective of eps growth further 
provisions apply with relation to companies 
exiting the index or being divested to ensure 
consistency of approach and provide an 
objective measure   
•	 providing the total shareholder return 
performance condition as required above 
has been achieved the ltip shares will be 
released by the committee dependent on 
the company achieving an absolute level 
of earnings growth at the end of the three 
year performance period as measured by the 
following
•	 100 of the ltip shares will be released 
providing the annual growth of eps 
over the three year performance period 
exceeds 25 on average
•	 25 of the ltip shares will be released 
providing the annual growth of eps 
over the three years performance period 
exceeds 10 on average
•	 there will be straight line vesting of 
the ltip shares on eps growth between 
these two points
•	 for minimum vesting where the awards will 
vest at the 25 level
•	 no part of any awards shall vest unless 
both of the following conditions are met 
a the tsr must at least match that of 
the ftse 250 index excluding investment 
trust companies “the index” by 
reference to the total return as shown in 
that index over the performance period 
and  
b the eps of the company must increase 
by at least inflation  3 per annum 
during the performance period with 
inflation measured by reference to the 
consumer prices index
•	 if one or both of these minimum levels of 
performance are not achieved the awards will 
lapse
•	 for maximum vesting where the awards will 
vest at the 100 level
•	 for maximum vesting the company’s 
tsr over the performance period must in 
addition to meeting the eps condition in 
b above outperform the total return by 
reference to the consumer prices index 
by at least 100 where the tsr falls 
between the minimum level in a above 
and the maximum level awards will vest 
proportionately subject to meeting the 
eps condition 
•	 there have been no release of awards under 
the 2011 plan 
during 2011 there were three tranches of maturing 2006 plan shares
•	 pricewaterhousecoopers independently reported that the tsr performance criteria outlined above were satisfied with sdl 
comparator group rankings of 8 out of 24 7 out of 23 and 6 out of 22 for each respective tranche  
•	 the actual eps growth was an average over the four measures of 310p compared with a target average of 298p  
the remuneration committee therefore approved full vesting sdl annual report and financial statements 2011 
4
statutory information
77
release of 2006 plan awards
following approval by the committee of the company the following shares were released to executive directors 
pursuant to the rules of the sdl 2006 long term incentive plan
name title number of shares 
released
date released number of shares 
sold
sale price 
£
number of shares 
retained
mark lancaster chairman 80668 18 may 2011 0 na 80668
john hunter ceo 98887 12 dec 2011 58350 £625 40537
mark lancaster elected to retain his ltip award  john hunter elected to retain the maximum number of shares after funding exercise 
costs related income tax and national insurance liabilities he therefore retained 40537 shares increasing his beneficial holdings in the 
company from 28750 representing 004 of the shares in issue to 69287 representing 009 and sold 58350 shares 
awards under 2011 plan rules
on 18 may 2011 a total of 605476 ltip shares were 
granted to the executive directors and senior management 
when the market price was £670 with a performance 
period of three years from date of grant mark lancaster 
and john hunter were each awarded 67164 shares and 
matthew knight was awarded 27612 shares in addition 
on 1 july 2011 26772 ltip shares were granted to a senior 
management employee 
share options
sdl operates two discretionary share option plans the 
first of which was adopted by shareholders on 1 december 
1999 and which expired for the purposes of new grants on 
1 december 2009 the 1999 plan was replaced by a similar 
but updated plan at the agm in 2010 and comprises 
both an hmrc approved option plan and an unapproved 
plan with a total annual limit of up to 100 of salary 
measured by reference to the full market value of shares at 
the date of grant executive directors do not receive share 
options under the plan options can normally be exercised 
after three years subject to annual growth in earnings 
per share of at least rpi  5 there is no retesting of 
performance conditions if they are not met by the end of 
the relevant performance period no options are offered 
at a discount subject to meeting the performance 
conditions options are exercisable not earlier than the 
third anniversary of grant and then remain exercisable for a 
maximum period of seven years
sharesave “saye”
sdl offers an allemployee saye share option plan this 
standard hmrc approved savings related share option 
plan which was once open only to uk employees has 
been extended to employees in the netherlands in 
2011and will include canada and the usa in 2012 the 
plan is open to employees in those territories who satisfy 
a minimum service qualification of one year it is the 
intention to continue to extend the offer of a similar plan 
to other sdl locations overseas
dilution limitation
all sdl employee share schemes contain provisions 
limiting the total number of new issue shares including 
any reissuing of treasury shares that can be granted in 
any rolling 10year period to not more than 10 of issued 
share capital this dilution limit is in line with the current 
abi guidelines there is an additional inner limit of 5 of 
issued share capital on discretionary share grants to senior 
employees including executive directors the company has 
operated within these limits in 2011 utilising the employee 
benefit trust “ebt” approved at the agm in april 2008 
under the 2008 agm approval the ebt can acquire shares 
in the company by market purchase and hold them for the 
purpose of satisfying the granting and award of options 
or ltips under the group’s option and saye and ltip 
schemes the rules of the ebt also allow the company to 
contribute or loan monies to the ebt for the purpose of 
acquiring the company’s shares as at december 2011 the  78 78
ebt is established and has pledged to meet the company’s 
wishes that it satisfies some ltip awards subject to them 
vesting but it has not yet acquired any shares the ebt 
is able to hold shares totalling up to 5 of the issued 
share capital there have been no transactions in the ebt 
during the year
the company will use market purchase shares where 
necessary to satisfy any liabilities arising from outstanding 
share awards which would otherwise breach the 10 limit 
pensions
the executive directors are members of the sdl pension 
scheme the scheme is a defined contribution personal 
pension plan into which the group pays an annual 
sum equal to 12 for all executive directors except 
the chairman where the annual percentage in 2011 
was 133 remuneration for the purpose of pension 
contributions means basic salary excluding bonuses and 
benefitsinkind
fees
the fees for nonexecutive directors were increased in 
2011 see the table below for the fees paid to the non
executive directors in deciding an appropriate level of fees 
for each nonexecutive director the board consider the 
responsibility and time commitments taking into account 
the number of board meetings provision of strategic and 
general advice plus the chairmanship and membership 
of the audit committee the remuneration committee 
and the nomination committee nonexecutive directors 
are not involved in determining their own remuneration 
the nonexecutive director fees for mr campbell are 
denominated in us dollars so any variance in addition to 
the increase in fee derives from the effect of currency only 
nongroup directorships
no executive director currently holds any nongroup 
directorships
service contracts
the policy of the company is to have service contracts for 
all the executive directors that continue indefinitely unless 
determined by notice but to avoid long notice periods 
or excessive financial termination provisions the non
executive directors have contracts that run for threeyear 
terms commencing from their date of appointment 
subject to three months notice from either side there 
are no special provisions for executive or nonexecutive 
directors with regard to compensation in the event of loss 
of office no director terminations of employment have 
been made during 2011 and in the event of a termination 
the committee would consider the circumstances of 
individual cases and determine compensation payments 
accordingly no director had a notice period exceeding 12 
months as noted in the table below 
the service contracts and letters of appointment of the 
directors include the following terms
date of contract notice period
months
executive directors
mark lancaster 1 february 2011 12
john hunter 1 february 2011 6
matthew knight 14 april 2011 6
nonexecutive directors
chris batterham 15 october 2002 3
john matthews 27 may 2004 3
joe campbell 1 july 2005 3
david clayton 16 december 2009 3
jane thompson 16 december 2009 3
mandy gradden 30 january 2012 3
in compliance with b71 of the uk corporate governance 
code 2010 as a ftse 250 company all sdl directors 
seeking reelection will be subject to annual election by 
shareholders  john matthews and jane thompson will not 
be standing for reelection at the agm 2012   
biographical details of all directors can be found on pages 
48 and 49
directors’ remuneration report sdl annual report and financial statements 2011 
4
statutory information
79
sdl annual report and financial statements 2011 
79
performance graph
the graph below shows the shareholder return for each of 
the years from 2007 of a holding of the company’s shares 
against the corresponding change in the ftse all share 
software and computer services and ftse 250 excluding 
investment trusts indices the shares have consistently 
outperformed the index over this period 
total return
rebased data 2007  2011
50
0
100
150
200
250
300
350
2011 2010 2009 2008 2007
sdl  total return index
ftse techmark focus £  
 total return index
ftse all share sw  comp svs £  
 total return index
ftse 250 ex investment trust  
 total return index
ftse 250  total return index 80 80
sdl is a member of the ftse 250 index on advice the ftse 250 excluding investment trusts index has been selected 
by the committee as the most appropriate equity market index relative to the sector in which the group operates for the 
purposes of evaluating the group’s management against external sources for the purpose of the new ltip scheme for 
the legacy ltip scheme operating up to 2010 the all share software and computer services index was applied 
all ltip vesting is independently validated for the committee currently by pricewaterhousecoopers
information subject to audit
 
directors’ remuneration
the remuneration of the directors is as follows
basic salary
and fees
£
benefits
£
bonuses
£
total 2011
£
total 2010
£
executive directors
mark lancaster 300000 33245 291089 624334 588525
cristina lancaster 40000 3924  43924 241023
john hunter 291667 12364 242574 546605 374483
alastair gordon     19046
matthew knight 131042 8864 74648 214554 
nonexecutive directors
chris batterham 40000   40000 35000
john matthews 40000   40000 35000
joe campbell 37328   37328 32433
david clayton 45000   45000 30000
jane thompson 45000   45000 30000
mandy gradden     
total all directors 970036 58397 608311 1636743 1385510
 the benefits package of each executive director includes the provision of a company car or car allowance private health insurance 
and where applicable car fuel 
 alastair gordon was a director for three months in 2010
 matthew knight was appointed as a director on 14 april 2011
cristina lancaster was a director for three months in 2011
mandy gradden was appointed as a director on 30 january 2012 
directors’ remuneration report sdl annual report and financial statements 2011 
4
statutory information
81
sdl annual report and financial statements 2011 
81
pension entitlements
no pension contributions were made by sdl on behalf of nonexecutive directors the defined pension contributions 
made by sdl for each executive director are as follows
total 2011
£
total 2010
£
mark lancaster 40036 40036
cristina lancaster 4800 18450
john hunter 35000 24000
matthew knight 9250 
alastair gordon   
total all directors 89086 82486
interests in options
historically the group has maintained a share option scheme by which executive directors and other senior executives 
are able to subscribe for and acquire ordinary shares in the company this scheme has two elements one approved 
and one unapproved and was formally adopted by special resolution on 1 december 1999 the approved element has 
been accepted by the inland revenue under the terms of the income and corporation taxes act 1988 with effect from 
23 february 2000 prior to december 1999 options were granted under unapproved schemes previously adopted by the 
group the 1999 option scheme expired for new grants in december 2009 
no grants have been made to executive or nonexecutive directors under the new option scheme approved by the 
shareholders on 23 april 2010 the 2010 scheme permits the granting of both options approved by hm revenue and 
customs within the statutory £30000 limit and unapproved options subject to performance conditions from 2010 all 
options have been granted in accordance with these rules 
the interests of the directors in share options up to 31 december 2011 are as follows
exercise 
price
at 1 
january 
2011
awarded 
during 
the year
exercised
during 
the year
expired
unexercised
during the year
at 31
december 
2011
no no no no no
cristina lancaster 11933p 5716    5716
mark lancaster 11933p 200000    200000
the options are exercisable between 4 april 2006 and 4 april 2015
 for cristina lancaster the interests in share options are shown to the date of resignation
during the period 1 january 2011 through to 31 december 2011 the market price of ordinary shares has ranged 
between 586p and 7115p the market price of the ordinary shares at 31 december 2011 was 665p
the vesting conditions are set out on pages 75 and 76 of the group accounts 82 82
interests in longterm incentive plan shares
the interests of the directors in longterm incentive plan shares up to 31 december 2011 are as follows
issue 
price
at 1 
january 
2011
awarded 
during 
the year
exercised
during 
the year
achieved
during the 
year
expired
unexercised
during the 
year
at 31
december 
2011
no no no no no no
mark lancaster 27892p
a
80668  80668   
mark lancaster 2905p
b
103270     103270
mark lancaster 4943p
d
60692     60692
mark lancaster 670p
e
 67164    67164
cristina lancaster 27892p
a
39438     39438
cristina lancaster 2905p
b
46472     46472
john hunter 20225p
c
98887  98887   
john hunter 4943p
d
40461     40461
john hunter 670p
e
 67164    67164
matthew knight 670p
e
 27612    27612
the awards have expiry dates as follows
a awarded 28 february 2008 expire 28 february 2018
b awarded 2 march 2009 expire 2 march 2019
c awarded 28 november 2008 expire 28 november 2018
d awarded 12 april 2010 expire 12 april 2020
e awarded 18 may 2011 expire 18 may 2021
during the period there were gains realised of £511435 for mark lancaster and £618044 for john hunter on the 
exercise of ltips 635 pence per share and 625 pence per share respectively before commission
 for cristina lancaster the interests in ltips are shown to the date of resignation
matthew knight
director
16 march 2012
directors’ remuneration report sdl annual report and financial statements 2011 
4
statutory information
83
sdl annual report and financial statements 2011 
83 84
directors’ report
84
the directors present their report and the group accounts 
for the year ended 31 december 2011
results and dividends
the group profit for the year after taxation was £257 
million 2010 £220 million
the directors recommend a dividend of 58 pence per 
share to the agm reflecting their continuing confidence in 
the operational cash generation capability of the business 
this represents a 55 increase over the maiden dividend 
paid in the preceding year the directors are of the view 
that the business is at a stage when it is appropriate to 
offer a yield to those investors who value income as well as 
capital growth the dividend is not intended to adjust the 
positioning of sdl as primarily a capital growth share      
principal activities 
the group’s activities during the year continued to be the 
provision of global information management solutions 
through the provision of software and services to a wide 
variety of multinational businesses these global solutions 
enable sdl clients to engage with their clients in multiple 
languages and across multiple channels 
in 2011 the group acquired calamares a strategically 
important investment adding video and rich media 
management capability calamares now branded sdl 
media manager has been integrated with sdl tridion
the alterian plc acquisition completed in january 2012 
brings data analytics campaign management and social 
media to the group
review of the business
revenue for the year was £2290 million an increase of 
13 on 2010 £2035 million all businesses contributed 
positive revenue growth in 2011 headline revenue growth 
includes acquisition related growth of 2 a 1 decrease 
due to foreign exchange and underlying organic growth 
at constant currency of 12 performance in content 
management continued to be particularly strong with 
constant currency revenue growth of 19 driven by 
demand for tridion 2011 a new product release to 
the global marketplace and continued penetration of 
structured content products into the burgeoning technical 
documentation marketplace increased cross selling 
activity has also underpinned growth 
gross margin has increased to 58 from 57 in 2010 
primarily as a result of an increasing proportion of 
revenues derived from our technology businesses 41 
compared to 39 in 2010 profit before taxation and 
amortisation was £397 million compared to £354 million 
in 2010 an increase of 12 in line with the increase in 
revenues the business continued to selectively invest in 
strategic growth areas including innovation investment in 
acquisitions and new offices building sales and marketing 
capability and expanding in key long term growth 
territories headline operating margins were therefore 
stable year on year at 173 
operating cashflow from operations was £326 million 
2010 £271 million average days sales outstanding was 
stable and ensured that the business maintained strong 
cash flow during the year at the end of 2011 the group 
had £704 million of cash on the balance sheet which 
combined with £20 million of undrawn revolving credit 
facilities provided a robust base for the completion of the 
alterian acquisition on 27 january  2012 further details 
on the results for the year are given in the operating and 
financial review section of these accounts 
position future prospects and business risks
cross leveraging across the group has continued to impact 
positively the revenues during 2011 the growth prospects 
of the group remain positive based on our strong 
technology and services capabilities we have further 
increased our technologies during 2011 with the launch 
of many new products including tridion 2011 rated as a 
leader by forrester and gartner sdl trados studio 2011 
sdl livecontent 2011 and sdl easytranslator  
the board believes its continuing strategy to create 
compelling endtoend content management solutions is 
gaining significant traction with approximately 380 clients 
purchasing two or more sdl solutions the business 
continued to invest in global infrastructure in 2011 
strengthening infrastructural investment in china japan 
the nordics and south america 
the integration of the 2011 acquisition of calamares 
progressed rapidly and it is now fully integrated into 
sdl processes and systems we are also advanced in the 
planning and execution of the integration of the 2012 
alterian acquisition 
the board consider the group to be well positioned for the 
future whilst macroeconomic concerns exist particularly 
directors’ report sdl annual report and financial statements 2011 
4
statutory information
85
sdl annual report and financial statements 2011 
85
in some european economies we are experiencing growth 
in other economies particularly north america our clients 
are based in a wide range of geographies and vertical 
sectors 
the group generates approximately 59 of its revenue 
from service solutions and approximately 41 from 
technology 
the board continues to believe that asia the emerging 
economies in eastern europe selective markets in latin 
america and the nordic region offer solid long term 
growth opportunities for sdl the board have continued 
their strategy of growth investments in these countries 
  
the board remains confident that the business has 
potential for long term value creation   
     
details on the risks associated with the business are given 
in the operating and financial review
branches
the company operates branches in lebanon taiwan and 
germany
events since the statement of financial 
position date
on 27 january 2012 the company acquired alterian plc 
group there have been no other material events since 31 
december 2011 the directors recommend a dividend of 
58 pence per ordinary share as set out in note 25
corporate social responsibility 
framework 
we are building a reputation of being a model corporate 
citizen in the communities in which we operate and 
our employees are actively involved in community 
investment programmes worldwide we have an 
important contribution to make to our local communities 
by carrying out our business in a socially and ethically 
responsible manner operating our businesses with core 
values of integrity and transparency is crucial to our long 
term reputation we also have clear internal values of 
innovation collaboration and communication which are 
reflected in our five core values 
•	 partner with our customers to drive their success  
creating exceptional customer experience
•	 deliver thought leadership and innovation in all we 
do
•	 act as one global and professional organisation
•	 create an inspiring and rewarding environment for 
employees
•	 be a role model in the communities in which we 
operate
our corporate social responsibility framework continues 
to target three primary areas of employment and 
employee engagement the environment and community 
involvement  community activities are wide ranging 
and through our registered charity the sdl foundation 
include support for educational projects infrastructure 
regeneration and charitable giving
the board continues to hold the opinion that given the 
nature of the group’s business activities which do not 
involve heavy manufacturing material risks from social 
environmental and ethical issues are limited the board 
however takes very seriously its broader responsibility to 
society and takes a progressive approach in ensuring it 
meets its broader social obligations    
employment and employee engagement 
the diversity of our global workforce is a key strength of 
sdl which creates a truly international perspective across 
the sdl group and the ability to effectively service global 
clients  
the group rejects all forms of discrimination and operates 
an equal opportunities policy we expressly prohibit 
discrimination on grounds such as sex race religion 
or belief age or perceived age sexual orientation or 
disability 
the quality of our employee relations is a priority for sdl 
and we are proud of the high level of commitment and 
loyalty from our employees the group aims to provide 
our employees with genuine opportunity to meet their 
career aspirations with sdl encouraging employees 
to build long term careers through progressive role 
advancement and clear and transparent performance 
frameworks and personal development plans at the 
route of effective employee engagement is leadership 
communication and a process is in place to communicate 
performance monthly which is started by the chief 
executive officer and then cascaded through the operating 
line leadership in the various operating segments and  86
functions other information sources are available and 
employees are also encouraged to access the group’s 
corporate intranet and website there is strong emphasis 
on building effective teams which place the five core 
values at the heart of their operating agenda decision 
processes always seek to maximise value for sdl as a 
whole  
sdl supports employee share ownership and employees 
have the opportunity to participate in share ownership 
plans where practicable in 2012 eligible employees in 
canada the netherlands the uk and the usa will be 
invited to participate in the share save plans
we aim to provide employees with the right tools 
induction training and development experiences to 
perform effectively in their roles and to provide meaningful 
performance assessment and clarity of personal objectives 
and priorities that are aligned to company goals the 
training framework includes new manager training 
skill enhancement team building and cross functional 
training in 2011 refreshed mission vision and values were 
launched a variety of companywide and targeted training 
activities were undertaken we have found independent 
reviews and assessment by peer groups through 360 type 
mechanisms to be successful in promoting awareness 
of leadership development needs where necessary sdl 
continues to support overseas assignments or secondment 
of employees and obtains work permits or visas to enable 
employees to benefit from a period overseas we have 
also seen continued movement of employees across 
different operating segments in 2011 which is effective in 
transferring best practice and sustaining culture  
disabled employees
sdl values applications from disabled or handicapped 
persons and our policy is to always consider in full 
employment applications from disabled or handicapped 
persons where that person can perform the job 
requirements   
where existing employees become disabled it is the 
group’s policy wherever practicable to provide continuing 
employment under normal terms and conditions and 
disabled people are afforded the same training and 
development opportunities for personal growth as other 
employees within the organisation
under no circumstance will discrimination due to disability 
either direct or implied be tolerated  
employee involvement
employee engagement practices are viewed as extremely 
important to the board critical to employee engagement 
is effective and frequent internal communication to 
employees this is achieved through a number of 
mechanisms including monthly company performance 
and strategy presentations which the chief executive 
officer provides to a group of approximately 240 
employees this presentation is provided to all segment 
ceos and directors general managers and senior 
functional leaders for cascade through their own 
internal communication channels there is constructive 
engagement between executive directors and the different 
operations within the group enabling broad input on 
business strategic matters and corporate direction the 
chief executive officer also communicates fully via 
senior operating leadership the logic and rationale for 
acquisitions 
sdl continued through 2011 a knowledge series initiative 
which seeks to inform all employees through webinars 
about sdl’s different businesses strategy products 
and processes this initiative has been very popular in 
engaging and keeping employees informed and is a very 
valuable training tool the chief executive officer actively 
supports this initiative  
               
the chief executive officer is responsible for human 
resource issues encompassing all aspects of recruitment 
development and retention and dispute resolution 
delegating as necessary to the members of the executive 
management team or human resources team for policy 
dissemination and execution 
the sdl executive team meets approximately quarterly 
to discuss matters impacting the group this meeting is 
attended and chaired by the chief executive officer and 
also attended by the chief financial officer segment 
ceo’s and functional leaders in the group this executive 
team is the major decision making vehicle for operational 
matters impacting the group as a whole and plays a major 
role in ensuring alignment between operating segments
 
similar executive groups also meet for each operational 
segment and each segment has a fully formed executive 
leadership team the forums serve a critical purpose 
in leveraging best practice and collaboration across the 
group network office mangers and senior functional 
group management teams also meet regularly to distil 
and decide on common issues affecting the group as a 
whole in 2011 language services senior management 
directors’ report sdl annual report and financial statements 2011 
4
statutory information
87
held a global conference to share best practises and 
to drive the strategy for the division in 2011 the cto 
continued to meet with all of the heads of development 
together to share experience permeate best practice 
in agile development and drive roadmap delivery this 
innovation group has been a major support to transfer of 
best practice 
there is a strong emphasis placed on face to face 
communication with employees and senior managers are 
required to cascade relevant information from executive 
meetings to employees via face to face meetings these 
briefings generate feedback consultation and employee 
interest works councils and similar bodies are maintained 
and consulted with in accordance with local statutory 
requirements senior leadership are also encouraged to 
communicate face to face with employees whenever they 
make site visits 
a “whistleblowing policy” is in place which enables 
employees to bring matters of concern to the attention of 
the senior independent director in confidence no matters 
were raised via this route in 2011
the board is strongly supportive of providing employees 
with opportunities to invest and participate in the wealth 
creation of the group through participation in the share 
save scheme the first share scheme vested during the 
year and a further offer was made during the year under 
this scheme our first offer under the netherlands scheme 
went ahead in the year
community charity and the sdl foundation 
the sdl foundation independently chaired by alastair 
gordon was set up by the board in 2008 the sdl 
foundation seeks to provide investment to sustainable 
micro income generation and infrastructure projects 
around the world the foundation actively screens all 
proposals from employees and where appropriate 
engages directly with the charities involved to validate 
that projects effectively transfer aid and are in line with 
the objectives of the foundation some of the projects 
supported by the sdl foundation in 2011 are highlighted 
on page 42 of this report making a very big difference to 
several supported communities the foundation trustees 
requested that the sdl board pledge £260000 to the sdl 
foundation in respect of 2011 operations and the sdl 
board agreed to this request 
 
employees also participate via the sdl foundation 
in activities outside of the work environment  sdl is 
supportive of  broader community engagement allowing 
employees time off as appropriate this policy underpins 
the sdl foundation’s primary objective of giving employees 
the opportunity to get involved in working with and 
supporting charities close to their own communities
the group continues to actively support translation as a 
profession and has developed progressive relationships with 
several language facilities of universities in the countries 
in which it operates this serves as a way for the group to 
develop the translation profession as well as providing a 
valuable potential career outlet for students and a source 
of potential future employees in 2011 we have developed 
relationships with a number of universities including 
university of gdansk shanghai maritime university 
university college dublin and university of massachusetts 
the group has also enhanced academic collaboration in its 
techonology businesses  
 
environment
the sdl group has no manufacturing processes so the 
goal of any environmental projects needs to be focussed 
on facilities management and indirect impacts on the 
environment such as travel during 2011 the board extended 
co2 emissions management to other offices around the 
group in maidenhead where comparative data exits 
emissions were reduced by 13 we set out these measures 
and our environmental program on page 39 of this annual 
report by raising awareness of environmental matters 
sdl seeks to stimulate employees to directly help protect 
the environment and minimize the overall environmental 
burden of operations sdl has raised consciousness about 
waste generation recycling and resource conservation 
in its operations and recognising travel as a key driver to 
environmental impact sought  alternatives to minimize travel 
via use of technology such as web conferencing and more 
effective travel scheduling cycle to work initiatives and car 
pooling schemes also aim to take employee related traffic off 
the road           
environmental efficiency is always given consideration 
when selecting new office premises and energy efficient 
systems are promoted and used where they provide 
shareholder return by reducing energy consumption the 
board considers that there is often a strong fit between 
energy use reduction and commercial return
the environmental impact of disposal of outmoded 
or obsolete equipment is minimized and provision of 
recycling facilities reuse or donation schemes are actively 
considered  88
directors and their interests
the directors and their interests in the share capital of the group as at 31 december 2011 all beneficially held 
according to the register of directors’ interests are detailed as follows
class 2011 
number
2010 
number
mark lancaster ordinary 618651 537983
john hunter ordinary 69287 28750
matthew knight ordinary  
chris batterham ordinary 86895 86895
john mattews ordinary 15000 15000
joe campbell ordinary  
david clayton ordinary  
jane thompson ordinary  
the above list represents all persons who were directors at any time during the year with the exception of cristina 
lancaster who resigned on 31 march 2011
details of options and longterm incentive plan shares held by directors at the yearend are given in the directors’ 
remuneration report on pages 81 to 82 
there have been no further changes to any directors’ interests in shares including options and long term incentive plan 
shares since the end of the financial year up to a date that is not more than one month before the date of the notice of 
general meeting
the company has granted an indemnity to one or more of its directors and subsidiary company directors against liability 
in respect of proceedings brought by third parties subject to the conditions set out in the companies act 2006 such 
qualifying third party indemnity provision remains in force as at the date of approving the directors’ report 
indemnification of directors
as at the date of this report indemnities are in force under which the company has agreed to indemnify the directors 
to the extent permitted by law and the company’s articles of association in respect of all losses arising out of or in 
connection with the execution of their powers duties and responsibilities as directors of the company or any of its 
subsidiaries
compliance with the uk corporate governance code
the statements of compliance with the principles of the uk corporate governance code 2010 are set out on page 64 of 
the annual report the corporate governance statement on pages 64 to 68 forms part of the directors’ report 
directors’ report sdl annual report and financial statements 2011 
4
statutory information
89
takeover directive 
the company has implemented the requirements of the takeover directive in the year and discloses the following 
information 
•	 the structure of the company’s capital and the rights and obligations attached to those shares are given in note 18 
to the accounts 
•	 there are no restrictions on the transfer of securities of the company including limits on holdings and requirements 
to obtain approval of the company or other holders for a transfer 
•	 all persons with a significant holding along with the value of that holding are given in the table below share price 
at 6 march 2012 723 pence  
holding at  
6 march 2012
 of issued  
share capital
value of holding 
£’000
blackrock 10050097 1268 £72662
baillie gifford 5163931 651 £37335
standard life investments 5109760 644 £36944
fc asset management 4788507 604 £34621
old mutual asset managers 4652350 587 £33636
axa investment managers 4346244 548 £31423
herald investment managers 2976269 375 £21518
legal  general investment management 2810156 354 £20317
aviva investors 2513232 317 £18171
montanaro investment managers 2434389 307 £17601 
fidelity investments 2433314 307 £17592
there is no person holding securities with special control rights
•	 all shares issued under employee share schemes have rights which are directly exercisable by the employees 
•	 there is no restriction on voting rights 
•	 there are no agreements between shareholders that may result in restrictions on the transfer of securities or on 
voting rights 
•	 amended articles taking account of changes in english company law brought about by the companies act 2006 
were approved by shareholders at the annual general meeting on 23 april 2010 
•	 the powers of the directors are given in the articles of association plus those granted by special resolution at the 
agm dated 24 april 2009 governing shares issuance
•	 there are no significant agreements entered into by the company that take effect alter or terminate upon a change 
of control following a takeover bid
•	 the agreements between the company and its directors for compensation for loss of office are given in the directors 
remuneration report on page 78 90
contractual relationships
there are no individual contracts which are considered 
to be significant or critical to the overall business of the 
group 
creditor payment policy and practice
it is the group’s policy that payments to suppliers are 
made in accordance with those terms and conditions 
agreed between the group and its suppliers provided 
that all trading terms and conditions have been complied 
with and that there are no disputes this policy was 
applied consistently in 2011 and the ethical treatment of 
suppliers is of importance to the supply relationships with 
the extensive list of individual freelance translators that 
form an integral part of the translation supply chain and 
on whom sdl relies any changes in supplier terms and 
conditions are through negotiation 
at 31 december 2011 the company had an average of 36 
days purchases outstanding in trade creditors 2010 34 
days
research and development activities
the group conducts research and development 
activities in a number of locations including the uk 
usa netherlands ukraine bulgaria and romania these 
activities are concentrated on maintaining the group’s 
software products in providing global information 
management solutions in the form of language services 
language technologies and content management 
solutions research and development expenditure 
increased by 8 in 2011 to £148 million 
financial instruments
an explanation of the group’s financial instrument risk 
management objectives policies and strategies are set out 
in the operating and financial review on pages 50 to 59 
group policy prohibits operating units from entering into 
derivative or financial instrument transactions and this 
must be done at group level under the control of the chief 
financial officer 
political and charitable donations
during the year no political donations were made 
charitable donations amounting to £2051 were made to 
external charities and £260000 was donated to the sdl 
foundation as noted above 
auditor
a resolution to reappoint kpmg audit plc as auditor will 
be put to the members at the annual general meeting
directors’ statement as to disclosure of infor
mation to auditor
the directors who were members of the board at the 
time of approving the directors’ report are listed on page 
155 having made enquiries of fellow directors and of the 
company’s auditor each of these directors confirms that
•	 to the best of each director’s knowledge and belief 
there is no information relevant to the preparation 
of their report of which the company’s auditor are 
unaware and
•	 each director has taken all the steps a director might 
reasonably be expected to have taken to be aware of 
relevant audit information and to establish that the 
company’s auditor is aware of that information
directors’ report sdl annual report and financial statements 2011 
4
statutory information
91
responsibility statement of the directors in 
relation to the group financial statements
in accordance with the fsa’s disclosure and transparency 
rules the directors confirm to the best of their knowledge 
that
•	 the financial statements prepared in accordance 
with the applicable set of accounting standards give 
a true and fair view of the assets liabilities financial 
position and profit or loss of the company and the 
undertakings included in the consolidation taken as a 
whole and
•	 the chairman’s statement chief executive officer’s 
statement operating and financial review and 
the directors’ report include a fair review of the 
development and performance of the business 
and the position of the issuer and the undertakings 
included in the consolidation taken as a whole 
together with a description of the principal risks and 
uncertainties that they face
special business at the annual general meeting
at the annual general meeting items 1 to 13 inclusive 
are proposed as ordinary resolutions and items 14 and 
15 as special resolutions these resolutions together with 
explanatory notes as appropriate are set out in the notice 
of annual general meeting 
where shareholders are in any doubt as to what action 
to take in this matter they should consult appropriate 
independent advisors where all securities have been sold 
or transferred by the person receiving this document 
it should be passed to the person for whom the sale or 
transfer was affected for transmission to the purchaser or 
transferee
company number
the company number of sdl plc is 2675207
by order of the board
matthew knight
director
16 march 2012 92
st a tement of directors’ responsibilities in 
respect of the group financial st a tements
statement of directors’ responsibilities in 
respect of the group financial statements
the directors are responsible for preparing the annual 
report and the group and parent company financial 
statements in accordance with applicable law and 
regulations
company law requires the directors to prepare group and 
parent company financial statements for each financial 
year under that law they are required to prepare the 
group financial statements in accordance with ifrss as 
adopted by the eu and applicable law and have elected 
to prepare the parent company financial statements in 
accordance with uk accounting standards and applicable 
law uk generally accepted accounting practice
under company law the directors must not approve the 
financial statements unless they are satisfied that they give 
a true and fair view of the state of affairs of the group and 
parent company and of their profit or loss for that period 
in preparing each of the group and parent company 
financial statements the directors are required to
•	 select suitable accounting policies and then apply 
them consistently
•	 make judgments and estimates that are reasonable 
and prudent
•	 for the group financial statements state whether 
they have been prepared in accordance with ifrss as 
adopted by the eu
•	 for the parent company financial statements state 
whether applicable uk accounting standards have 
been followed subject to any material departures 
disclosed and explained in the parent company 
financial statements and
•	 prepare the financial statements on the going concern 
basis unless it is inappropriate to presume that the 
group and the parent company will continue in 
business 
the directors are responsible for keeping adequate 
accounting records that are sufficient to show and explain 
the parent company’s transactions and disclose with 
reasonable accuracy at any time the financial position of 
the parent company and enable them to ensure that its 
financial statements comply with the companies act 2006 
they have general responsibility for taking such steps 
as are reasonably open to them to safeguard the assets 
of the group and to prevent and detect fraud and other 
irregularities
under applicable law and regulations the directors 
are also responsible for preparing a directors’ report 
directors’ remuneration report and corporate 
governance statement that complies with that law and 
those regulations
the directors are responsible for the maintenance and 
integrity of the corporate and financial information 
included on the company’s website legislation in the 
uk governing the preparation and dissemination of 
financial statements may differ from legislation in other 
jurisdictions  sdl annual report and financial statements 2011 
4
statutory information
93 94
independent auditor’s report
94
independent auditor’s report to the members 
of sdl plc 
we have audited the financial statements of sdl plc 
for the year ended 31 december 2011 set out on pages 
96 to 153 the financial reporting framework that has 
been applied in the preparation of the group financial 
statements is applicable law and international financial 
reporting standards ifrss as adopted by the eu the 
financial reporting framework that has been applied in the 
preparation of the parent company financial statements 
is applicable law and uk accounting standards uk 
generally accepted accounting practice
this report is made solely to the company’s members 
as a body in accordance with chapter 3 of part 16 of the 
companies act 2006 our audit work has been undertaken 
so that we might state to the company’s members 
those matters we are required to state to them in an 
auditor’s 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 and the 
company’s members as a body for our audit work for 
this report or for the opinions we have formed
respective responsibilities of directors and auditors
as explained more fully in the directors’ responsibilities 
statement set out on page 92 the directors are responsible 
for the preparation of the financial statements and for 
being satisfied that they give a true and fair view our 
responsibility is to audit and express an opinion on the 
financial statements in accordance with applicable law 
and international standards on auditing uk and ireland 
those standards require us to comply with the auditing 
practices board’s apb’s ethical standards for auditors
scope of the audit of the financial statements
a description of the scope of an audit of financial 
statements is provided on the apb’s website at wwwfrc
orgukapbscopeprivatecfm
opinion on financial statements
in our opinion
•	 the financial statements give a true and fair view of 
the state of the group’s and of the parent company’s 
affairs as at 31 december 2011 and of the group’s 
profit for the year then ended
•	 the group financial statements have been properly 
prepared in accordance with ifrss as adopted by the eu
•	 the parent company financial statements have been 
properly prepared in accordance with uk generally 
accepted accounting practice
•	 the financial statements have been prepared in 
accordance with the requirements of the companies 
act 2006 and as regards the group financial 
statements article 4 of the ias regulation
opinion on other matters prescribed by the companies 
act 2006
in our opinion
•	 the part of the directors’ remuneration report to be 
audited has been properly prepared in accordance 
with the companies act 2006 
•	 the information given in the directors’ report for the 
financial year for which the financial statements are 
prepared is consistent with the financial statements
independent auditor’s report sdl annual report and financial statements 2011 
4
statutory information
95
sdl annual report and financial statements 2011 
95
matters on which we are required to report by exception
we have nothing to report in respect of the following
under the companies act 2006 we are required to report 
to you if in our opinion
•	 adequate accounting records have not been kept by 
the parent company or returns adequate for our audit 
have not been received from branches not visited by 
us or
•	 the parent company financial statements and the part 
of the directors’ remuneration report to be audited 
are not in agreement with the accounting records and 
returns or
•	 certain disclosures of directors’ remuneration specified 
by law are not made or
•	 we have not received all the information and 
explanations we require for our audit
under the listing rules we are required to review
•	 the directors’ statement set out on page 59 in 
relation to going concern and
•	 the part of the corporate governance statement on 
page 64 relating to the company’s compliance with 
the nine provisions of the uk corporate governance 
code specified for our review
•	 certain elements of the report to shareholders by the 
board on directors’ remuneration
 
p gresham senior statutory auditor
for and on behalf of kpmg audit plc statutory auditor
chartered accountants
15 canada square 
london 
e14 5gl
16 march 2012 96
consolidated income statement
for the year ended 31 december 2011
96
notes
2011 
£’000
2010 
£’000
sale of goods 40632 34642
rendering of services 188369 168907
revenue 4 229001 203549
cost of sales 95397 87626
gross profit 133604 115923
administration expenses – excluding amortisation of intangible assets 5 94189 80738
operating profit before amortisation of intangible assets 39415 35185
administration expenses – amortisation of intangible assets 5 5903 6587
operating profit 5 33512 28598
finance revenue 5 444 322
finance costs 5 195 112
profit before tax 33761 28808
tax expense 6 8025 6764
profit for the year attributable to equity holders  
of the parent
25736 22044
earnings per ordinary share – basic pence 8 3272 2839
earnings per ordinary share – diluted pence 8 3173 2744
adjusted earnings per ordinary share basic and diluted are shown in note 8
consolidated income statement  sdl annual report and financial statements 2011 
4
statutory information
97
sdl annual report and financial statements 2011 
97
consolidated statement of 
comprehensive income
for the year ended 31 december 2011
notes
2011 
£’000
2010 
£’000
profit for the period 25736 22044
currency translation differences on foreign operations 2340 3191
currency translation differences on foreign currency equity loans to 
foreign subsidiaries
340 895
income tax benefit on currency translation differences on foreign 
currency equity loans to foreign subsidiaries
6 110 90
other comprehensive income 2570 3996
total comprehensive income 23166 18048
all the total comprehensive income is attributable to equity shareholders of the parent and relates to continuing activities
consolidated statement of comprehensive income 98
notes 2011 
£’000
2010 
£’000
assets
non current assets
property plant and equipment 9 6415 6323
intangible assets 10 155144 159305
deferred tax asset 6 4976 6356
rent deposis 951 903
167486 172887
current assets
trade and other receivables 13 52756 52140
cash and cash equivalents 14 70408 46628
123164 98768
total assets 290650 271655
current liabilities
trade and other payables 15 53489 54631
current tax liabilities 9982 10326
provisions 17 839 1224
64310 66181
current liabilities
other payables 16 1102 622
deferred tax liability 6 6847 8592
provisions 17 559 748
8508 9962
total liabilities 72818 76143
net assets 217832 195512
equity
share capital 18 792 780
share premium account 95875 94974
retained earnings 99024 75047
foreign exchange differences 22141 24711
total equity 217832 195512
approved by the board of directors on 16 march 2012
j hunter       m knight 
director       director
consolidated statement of financial 
position
at 31 december 2011
consolidated statement of financial position sdl annual report and financial statements 2011 
4
statutory information
99
share
capital
£’000
share
premium
account
£’000
shares to be 
issued
£’000
retained 
earnings
£’000
foreign 
exchange 
differences
£’000
total
£’000
at 1 january 2010 770 93207 203 50218 28707 173105
profit for the period    22044  22044
other comprehensive income     3996 3996
total comprehensive income    22044 3996 18048
deferred income taxation on 
sharebased payments note 6
   342  342
tax credit for share options 
note 6
   557  557
arising on share issues 10 1564    1574
arising on acquisition of 
passolo
 203 203   
sharebased payments note 19    1886  1886
at 31 december 2010 780 94974  75047 24711 195512
share
capital
£’000
share
premium
account
£’000
shares to be 
issued
£’000
retained 
earnings
£’000
foreign 
exchange 
differences
£’000
total
£’000
at 1 january 2011 780 94974  75047 24711 195512
profit for the period    25736  25736
other comprehensive income     2570 2570
total comprehensive income    25736 2570 23166
deferred income taxation on 
sharebased payments note 6
   821  821
tax credit for share options 
note 6
   523  523
arising on share issues 12 901    913
dividend paid    4328  4328
sharebased payments note 
19
   2867  2867
at 31 december 2011 792 95875  99024 22141 217832
the amounts above are attributable to equity holders of the parent company
consolidated statement of changes 
in equity
for the year ended 31 december 2011
consolidated statement of changes in equity 100
consolidated statement of cash flows
for the year ended 31 december 2011
100
notes
2011 
£’000
2010 
£’000
profit before tax 33761 28808
depreciation of property plant and equipment 9 3070 2561
amortisation of intangible assets 10 5903 6587
finance revenue 444 322
finance costs 195 112
sharebased payments 2867 1886
gain  loss on disposal of property plant  equipment 1 89
decrease in trade and other receivables 1099 9727
decrease  increase in trade and other payables 1616 3639
exchange differences 1506 2053
cash generated from operations 41130 31580
income tax paid 8517 4510
net cash flows from operating activities 32613 27070
cash flows from investing activities
payments to acquire property plant  equipment 3870 2568
receipts from sale of property plant  equipment 88 85
payments to acquire subsidiaries 1325 27880
net cash acquired with subsidiaries  1958
interest received 417 363
net cash flows from investing activities 4690 28042
cash flows from financing activities
net proceeds from issue of ordinary share capital 913 1574
dividends paid 4328 
repayment of capital leases 332 157
interest paid 195 112
net cash flows from financing activities 3942 1305
increase in cash and cash equivalents                                  23981 333
movement in cash and cash equivalents
cash and cash equivalents at the start of year 46628 46160
increase in cash and cash equivalents 20 23981 333
effect of exchange rates on cash and cash equivalents 20 201 135
net cash and cash equivalents at end of year 20 70408 46628
consolidated statement of cash flows sdl annual report and financial statements 2011 
4
statutory information
101
sdl annual report and financial statements 2011 
101
1  corporate information
the consolidated financial information of sdl plc the 
‘group’ for the year ended 31 december 2011 was 
authorised for issue in accordance with a resolution of the 
directors on 16 march 2012 sdl plc is a public limited 
company incorporated and domiciled in england whose 
shares are publicly traded on the london stock exchange 
the consolidated financial statements of sdl plc and 
its subsidiaries have been prepared in accordance with 
international financial reporting standards as adopted by 
the european union
the principal activities of the group are described in 
note 4
2  accounting policies
basis of accounting
the consolidated financial statements of sdl plc and 
its subsidiaries have been prepared in accordance with 
international financial reporting standards as adopted by 
the eu as relevant to the financial statements of sdl plc 
the company has elected to prepare its parent company 
financial statements in accordance with uk gaap and 
these are presented on pages 139 to 153 the consolidated 
financial statements are prepared on a historical cost basis 
except for derivative financial instruments that have been 
measured at fair value
the consolidated financial statements are presented in uk 
sterling and all values are rounded to the nearest thousand 
except where otherwise indicated 
changes in accounting policy
the accounting policies adopted are consistent with those 
of the previous financial year
basis of preparation of consolidated financial statements
the consolidated financial statements include the results 
of the company and all its subsidiaries for the full year 
or from the date of acquisition if later subsidiaries are all 
entities over which the group has the power to govern 
the financial and operating policies subsidiaries are fully 
consolidated from the date on which control is transferred 
to the group the group has elected not to apply ifrs 3 
retrospectively to business combinations that took place 
before the date of 1 january 2004 as a result goodwill 
recognised as an asset at 31 december 2003 is recorded at 
its carrying amount under uk gaap and is not amortised 
the purchase method of accounting is used to account 
for the acquisition of subsidiaries by the group the 
cost of an acquisition is measured as the fair value of the 
assets equity instruments issued and liabilities incurred or 
assumed at the date of exchange identifiable assets and 
liabilities acquired and contingent liabilities assumed in 
a business combination are measured initially at their fair 
values at the acquisition date irrespective of the extent 
of any noncontrolling interest the excess of the cost of 
acquisition over the fair value of the group’s share of the 
identifiable net assets acquired is recorded as goodwill 
transaction costs are expensed as incurred if the cost of 
acquisition is less than the fair value of the net assets of the 
subsidiary acquired the difference is recognised directly in 
the income statement if the business combination allows 
for a provision of contingent consideration this will be 
provided in the accounts at the fair value to the extent it 
is considered probable that the liability will accrue if the 
business combination allows for deferred compensation 
this will be recognised in the income statement over the 
service period
intangible assets goodwill 
following initial recognition goodwill is measured at 
cost less any accumulated impairment losses goodwill 
is reviewed for impairment annually or more frequently 
if events or changes in circumstances indicate that the 
carrying value may be impaired as at the acquisition 
date any goodwill acquired is allocated to each of the 
cash generating units expected to benefit from the 
combination’s synergies a cashgenerating unit is the 
smallest identifiable group of assets that generate cash 
inflows that are largely independent of the cash inflows 
from other assets this is usually at business segment level 
or statutory company level as the case may be impairment 
is determined by assessing the recoverable amount of 
the cashgenerating unit to which the goodwill relates 
where the recoverable amount of the cashgenerating 
unit is less than the carrying amount an impairment 
loss is recognised goodwill arising on acquisitions pre 
1 january 2004 was capitalised and amortised over its 
useful economic life which was presumed to be 8 years 
any goodwill remaining on the balance sheet at 1 january 
2004 is not amortised after 1 january 2004 but is also 
subject to annual impairment reviews
intangible assets other
intangible assets acquired separately are capitalised at cost 
and from a business acquisition are capitalised at fair value 
as at the date of combination following initial recognition 
intangible assets are held at cost less accumulated 
no tes t o the accounts
notes to the accounts 102
amortisation intangible assets are amortised on a straight
line basis over their useful economic lives which are 
reassessed annually together with any assessment of 
residual value the useful lives of these intangible assets 
are assessed over the expected period that benefits accrue 
to the group amortisation is charged as a separate line 
item on the income statement
customer relationship intangible assets are amortised 
on a straightline basis over their estimated useful life 
of between 5 and 7 years other intangible assets are 
amortised on a straightline basis over their estimated 
useful life of between 5 and 15 years
research and development costs
research costs are expensed as incurred development 
expenditure incurred on an individual project is carried 
forward when its future recoverability can reasonably 
be regarded as assured and technical feasibility and 
commercial viability can be demonstrated where these 
criteria are not met the expenditure is expensed to the 
income statement following the initial recognition 
of the development expenditure the cost model is 
applied requiring the asset to be carried at cost less any 
accumulated amortisation and accumulated impairment 
losses any expenditure carried forward is amortised 
over the period of expected future sales from the related 
project the carrying value of development costs is 
reviewed for impairment annually when the asset is not yet 
in use or more frequently when an indicator of impairment 
arises during the reporting year indicating that the 
carrying value may not be recoverable
development costs that are subject to amortisation are 
reviewed for impairment whenever events or changes in 
circumstances indicate that the carrying amount may not 
be recoverable 
intangible assets impairment of assets
an impairment loss is recognised for the amount by 
which the asset’s carrying amount exceeds its recoverable 
amount the recoverable amount is the higher of an asset’s 
fair value less costs to sell and its value in use where 
value in use is calculated as the present value of the future 
cash flows expected to be derived from the asset for the 
purpose of assessing impairment assets are grouped at 
the lowest levels for which there are separately identifiable 
cash flows cash generating units
property plant and equipment 
property plant and equipment are stated at historical cost 
less depreciation and any impairment in value historical 
cost includes the expenditure that is directly attributable 
to the acquisition of the assets all other repairs and 
maintenance are charged to the income statement 
during the financial period in which they are incurred 
depreciation is provided to write off the cost less the 
estimated residual value based on prices at the balance 
sheet date of property plant and equipment over their 
estimated useful economic lives as follows
leasehold improvements
the lower of ten years or the lease term straight line
computer equipment
45 years straight line
fixtures  fittings 
20 reducing balance
motor vehicles
20 reducing balance
useful economic lives and residual values are assessed 
annually
an item of property plant and equipment is derecognised 
upon disposal or when no future economic benefits are 
expected to arise from the continued use of the asset any 
gain or loss arising on derecognising the asset calculated 
as the difference between the net disposal proceeds and 
the carrying amount of the item is included in the income 
statement in the year the item is derecognised
revenue
revenue is recognised to the extent that it is probable 
that the economic benefits will flow to the group and the 
revenue can be measured reliably for multiple element 
arrangements revenue is allocated to each element on 
fair value regardless of any separate prices stated within 
the contract the portion of the revenue allocated to an 
element is recognised when the revenue recognition 
criteria for that element have been met the following 
specific recognition criteria must also be met before 
revenue is recognised
rendering of services
revenue on service contracts is recognised only when 
their outcomes can be foreseen with reasonable certainty 
and is based on the percentage stage of completion of 
the contracts calculated on the basis of costs incurred 
accrued and deferred revenue arising on longterm service 
contracts is included in trade receivables as accrued 
income and in trade and other payables as deferred 
income as appropriate 
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
103
support and maintenance contracts are invoiced in 
advance and normally run for periods of 12 months with 
automatic renewal on the anniversary date revenue 
in respect of support and maintenance contracts is 
recognised evenly over the 12 months commencing from 
the date of the contract period
managed services hosting fees are recognised over the 
term of the hosting contract on a straightline basis
professional services and consulting revenue which is 
provided on a ‘time and expense’ basis is recognised as 
the service is performed
sale of goods
revenue from the sale of goods is recognised when the 
significant risks and rewards of ownership of the goods 
have passed to the buyer usually on despatch of the 
goods
revenue on software licenses and upgrades is recognised 
on despatch when there are no significant vendor 
obligations remaining and the collection of the resulting 
receivable is considered probable in circumstances where 
a considerable future vendor obligation exists as part of a 
software licence and related services contract revenue is 
recognised over the period that the obligation exists per 
the contract 
foreign currencies
transactions in foreign currencies are recorded using the 
rate of exchange ruling at the date of the transaction 
monetary assets and liabilities denominated in foreign 
currencies are translated using the rate of exchange 
ruling at the balance sheet date and the gains or losses on 
translation are included in the income statement with the 
exception of differences on foreign currency borrowing 
that provide a hedge against a net investment in a foreign 
entity these are taken directly to the statement of 
comprehensive income until the date of disposal of the 
net investment at which time they are recognised in the 
consolidated income statement the assets and liabilities 
of overseas subsidiaries and branches are translated 
at the closing exchange rate income statements of 
such undertakings are translated at the average rate of 
exchange during the year gains and losses arising on 
these translations are taken to reserves as permitted by 
ifrs 1 sdl has elected to deem the cumulative amount 
of exchange differences arising on translation of the net 
investments in subsidiaries at 1 january 2004 to be nil
intracompany loans for which settlement is neither 
planned nor likely to occur in the foreseeable future are 
defined as quasiequity loans and the currency translation 
differences on retranslation at the balance sheet date are 
recognised in the statement of comprehensive income
hedge accounting
the group uses derivative financial instruments such as 
foreign currency and interest rate contracts to hedge its 
risks associated with interest rate and foreign currency 
fluctuations such derivative financial instruments are 
stated at fair value the fair value of forward exchange 
contracts is calculated by reference to current forward 
exchange rates for contracts with similar maturity profiles 
the fair value of interest rate contracts is determined 
by reference to market values for similar instruments 
the derivatives entered into do not qualify for hedge 
accounting and therefore any gains or losses arising from 
changes in fair value are taken directly to net profit or loss 
for the period
cash and cash equivalents
cash and cash equivalents include cash in hand and 
deposits held at call with banks for the purpose of the 
consolidated statement of cash flows cash and cash 
equivalents consist of cash and cash equivalents as defined 
above
borrowing costs
borrowing costs are recognised as an expense in the 
period in which they are incurred unless they relate to 
capitalised research and development
leases
finance leases which transfer to the group substantially 
all the risks and benefits incidental to ownership of the 
leased item are capitalised at the inception of the lease at 
the fair value of the leased asset or if lower at the present 
value of the minimum lease payments lease payments are 
apportioned between the finance charges and reduction of 
the lease liability so as to achieve a constant rate of interest 
on the remaining balance of the liability finance charges 
are charged directly within the income statement
leases where the lessor retains substantially all the risks 
and benefits of ownership of the asset are classified as 
operating leases operating lease payments are recognised 
as an expense in the income statement on a straightline 
basis over the lease term 104
incentives received from landlord
in accordance with sic 15 the aggregate benefit of 
incentives is recognised as a credit to the income 
statement the benefits of the incentives are allocated over 
the life of the lease on a straightline basis
pension cost
the company contributes to a group personal pension 
scheme for qualifying employees whereby it makes defined 
contributions to independently administered personal 
pension schemes the company does not control any of 
the assets or have any ongoing liabilities with regard to 
the performance of and payments from these individual 
personal schemes sdl global solutions ireland limited 
operates a separate defined contribution scheme whose 
assets are held separately from the company the pension 
cost charge for both schemes represents contributions 
payable during the period 
provisions
provisions are recognised when the group has a present 
obligation legal or constructive as a result of a past event 
it is probable that an outflow of resources embodying 
economic benefits will be required to settle the obligation 
and a reliable estimate can be made of the amount of 
the obligation if the effect of the time value of money is 
material provisions are discounted using a current pretax 
rate that reflects where appropriate the risks specific to 
the liability where discounting is used the increase in the 
provision due to the passage of time is recognised as a 
finance cost
financial assets
financial assets in the scope of ias 39 are classified as 
either financial assets at fair value through profit or loss 
loans and receivables and heldtomaturity investments 
as appropriate when financial assets are recognised 
initially they are measured at fair value plus in the 
case of financial assets not at fair value through profit or 
loss directly attributable transaction costs the group 
determines the classification of its financial assets after 
initial recognition and where allowed and appropriate re
evaluates this designation at each financial yearend
financial assets at fair value through profit or loss
financial assets classified as held for trading are included 
in the category ‘financial assets at fair value through 
profit or loss’ financial assets are classified as held for 
trading if they are acquired for the purpose of selling in 
the near term derivatives are also classified as held for 
trading unless they are designated and effective hedging 
instruments gains or losses on investments held for 
trading are recognised in income 
loans and receivables
loans and receivables are nonderivative financial assets 
with fixed or determinable payments that are not quoted 
in an active market such assets are carried at amortised 
cost using the effective interest method gains and losses 
are recognised in income when the loans and receivables 
are derecognised or impaired as well as through the 
amortisation process 
derecognition of financial assets and liabilities
a financial asset or liability is generally derecognised when 
the contract that gives rise to it is settled sold cancelled or 
expires
where an existing financial liability is replaced by another 
from the same lender on substantially different terms or 
the terms of an existing liability are substantially modified 
such as exchange or modification it is treated as a 
derecognition of the original liability and the recognition 
of the new liability such that the difference in the 
respective carrying amounts together with any costs or 
fees incurred are recognised in the profit or loss 
taxation
the charge for current taxation is based on the results for 
the year as adjusted for items which are nonassessable 
or disallowed based on tax rates that are enacted or 
substantively enacted at the balance sheet date 
deferred income tax is provided using the liability 
method on temporary differences at the balance sheet 
date between the tax bases of assets and liabilities and 
their carrying amounts for financial reporting purposes
deferred income tax liabilities are recognised for all taxable 
temporary differences except
•	 where the deferred income tax liability arises from 
the initial recognition of an asset or liability in a 
transaction that is not a business combination and 
at the time of the transaction affects neither the 
accounting profit or loss nor taxable profit or loss and
•	 in respect of taxable temporary differences associated 
with investments in subsidiaries where the timing 
of the reversal of the temporary differences can be 
controlled and it is probable that the temporary 
differences will not reverse in the foreseeable future 
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
105
deferred income tax assets are recognised for all 
deductible temporary differences carryforward of unused 
tax assets and unused tax losses to the extent that it is 
probable that taxable profit will be available against which 
the deductible temporary differences and the carry
forward of unused tax assets and unused tax losses can be 
utilised except
•	 where the deferred income tax asset relating to the 
deductible temporary difference arises from the initial 
recognition of an asset or liability in a transaction that 
is not a business combination and at the time of the 
transaction affects neither the accounting profit or 
loss nor taxable profit or loss and
•	 in respect of deductible temporary differences 
associated with investments in subsidiaries deferred 
tax assets are only recognised to the extent that it is 
probable that the temporary differences will reverse 
in the foreseeable future and taxable profit will be 
available against which the temporary differences can 
be utilised
the carrying amount of deferred income tax assets is 
reviewed at each balance sheet date and reduced to the 
extent that it is no longer probable that sufficient taxable 
profit will be available to allow all or part of the deferred 
income tax asset to be utilised
in the united kingdom the group is entitled to a tax 
deduction for amounts treated as remuneration on 
exercise of certain employee share options as explained 
under ‘sharebased payments’ below a remuneration 
expense is reorded in the consolidated income statement 
over the period from the grant date to the vesting date of 
the relevant options as there is a temporary difference 
between the accounting and tax bases a deferred tax asset 
may be recorded the deferred tax asset arising on share 
option awards is calculated as the estimated amount of 
tax deduction to be obtained in the future based on the 
group’s share price at the balance sheet date prorated 
to the extent that the services of the employee have been 
rendered over the vesting period if this amount exceeds 
the cumulative amount of the remuneration expense at 
the statutory rate the excess is recorded directly in equity 
against retained earnings similarly current tax relief in 
excess of the cumulative amount of the remuneration 
expense at the statutory rate is also recorded in retained 
earnings 
when deferred tax assets are recognised post acquisition 
goodwill is adjusted accordingly 
deferred income tax assets and liabilities are measured 
at the tax rates that are expected to apply to the year 
when the asset is realised or the liability is settled based 
on tax rates and tax laws that have been enacted or 
substantively enacted at the balance sheet date
income tax relating to items recognised directly in equity is 
recognised in equity and not in the income statement
revenues expenses and assets are recognised net of the 
amount of vat except
•	 where the vat incurred on a purchase of goods and 
services is not recoverable from the taxation authority 
in which case the vat is recognised as part of the cost 
of acquisition of the asset or as part of the expense 
item as applicable and
•	 trade receivables and payables are stated with the 
amount of vat included
the net amount of vat recoverable from or payable to 
the taxation authority is included as part of receivables or 
payables in the balance sheet
sharebased payments
employees including directors of the group receive 
remuneration in the form of sharebased payment 
transactions whereby employees render services in 
exchange for shares or rights over shares ‘equitysettled 
transactions’
equitysettled transactions
the cost of equitysettled transactions with employees 
is measured by reference to the fair value at the date at 
which they are granted and is recognised as an expense 
over the vesting period which ends on the date on which 
the relevant employees become fully entitled to the award 
fair value is determined by using an appropriate option 
pricing model in valuing equitysettled transactions 
no account is taken of any vesting conditions other 
than conditions linked to the price of the shares of the 
company market conditions the volatility in the models 
is calculated by reference to historical share price
the cost of equitysettled transactions is recognised 
together with a corresponding increase in equity ending 
on the date on which the relevant employees become 
entitled to the award ‘vesting date’ the cumulative 
expense recognised for equity settled transactions at each 
reporting date until the vesting date reflects the extent to  106
which the vesting period has expired and the number of 
awards that in the opinion of the directors of the group 
at that date based on the best available estimate of the 
number of equity instruments that will ultimately vest the 
expense is recognised in the income statement over the 
vesting period
no expense is recognised for awards that do not ultimately 
vest except for awards where vesting is conditional 
upon a market condition which are treated as vesting 
irrespective of whether or not the market condition is 
satisfied provided that all other performance conditions 
are satisfied
where the terms of an equitysettled award are modified 
as a minimum an expense is recognised as if the terms had 
not been modified in addition an expense is recognised 
over the remainder of the vesting period for any increase in 
the value of the transaction as a result of the modification 
as measured at the date of modification
where an equitysettled award is cancelled it is treated 
as if it had vested on the date of cancellation and any 
expense not yet recognised for the award is recognised 
immediately however if a new award is substituted for 
the cancelled award and designated as a replacement 
award on the date that it is granted the cancelled and new 
awards are treated as if they were a modification of the 
original award as described in the previous paragraph
the group has taken advantage of the transitional 
provisions of ifrs 2 in respect of equitysettled awards and 
has applied ifrs 2 only to equitysettled awards granted 
after 7 november 2002 that had not vested at 1 january 
2005
national insurance on share option grants
the anticipated national insurance charge on gains made 
by employees over the period from date of grant of the 
option to the end of the performance period has been 
provided for
new standards and interpretations not applied
iasb and ifric have issued the following standards and 
interpretations with an effective date after the date of these 
financial statements
international accounting standards iass  ifrss effective date
ifrs 7 financial instruments disclosure 1 july 2011
ifrs 9 financial instruments 
presentation
1 january 2015
ifrs 10 consolidated financial 
statements
1 january 2013
ifrs 11 joint arrangements 1 january 2013
ifrs 12 disclosure of interest in other 
entities
1 january 2013
ifrs 13 fair value measurement 1 january 2013
ias 1 amended presentation of 
financial statements
1 july 2012
ias 12 amended income taxes 1 january 2012
ias 19 revised employee benefits 1 january 2013
ias 27 revised consolidated and 
separate financial statements
1 january 2013
ias 28 revised investments in 
associates
1 january 2013
effective date refers to accounting periods commencing 
on or after the dates above
the directors do not anticipate that the adoption of these 
standards and interpretations will have a material impact 
on the group’s financial statements in the period of initial 
application 
significant critical accounting judgements estimates 
and assumptions
judgements
the preparation of the group’s consolidated financial 
statements requires management to make judgements 
estimates and assumptions that affect the reported 
amounts of revenues expenses assets and liabilities 
and the disclosure of contingent liabilities at the end of 
the reporting period however uncertainty about these 
estimates and assumptions could result in outcomes that 
require a material adjustment to the carrying amount of 
the asset or liability affected in future periods
in the process of applying the group’s accounting policies 
management has made the following judgements which 
have the most significant effect on the amounts recognised 
in the consolidated financial statements
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
107
research and development costs
management continually review research and 
development expenditure to assess whether any costs 
meet the criteria for capitalisation there have been no 
costs capitalised in 20112010 £nil with the primary 
criteria for non capitalisation being technical and 
commercial feasibility achieved late in the development 
cycle for new product releases
revenue – sale of goods
management reviews the terms of all license contracts to 
ensure that the appropriate fair values are determined and 
that there are no future vendor obligations that would 
affect the license revenue recognised
estimates and assumptions
the key assumptions and estimates concerning the future 
and other key sources of estimation uncertainty at the 
reporting date that have significant risk of causing a 
material adjustment to the carrying amounts of assets 
and liabilities within the next financial year are discussed 
below
revenue – rendering of services
management makes estimates of the total costs that 
will be incurred by sdl on a contract by contract basis 
management reviews the estimate of total costs on each 
contract on an ongoing basis to ensure that the revenue 
recognised accurately reflects the proportion of the work 
done at the balance sheet date
sharebased payments
the group measures the cost of equitysettled transactions 
with employees by reference to the fair value of the 
equity instruments at the date at which they are granted 
estimating fair value for sharebased payment transactions 
requires determining the most appropriate valuation 
model which is dependent on the terms and conditions 
of the grant this estimate also requires determining the 
most appropriate inputs to the valuation model including 
the expected life of the share option volatility and 
dividend yield and making assumptions about them the 
assumptions and models used for estimating fair value for 
sharebased payment transactions are disclosed in note 19
taxes
uncertainties exist with respect to the interpretation of 
complex tax regulations and the amount and timing 
of future taxable income given the wide range of 
international business relationships and the long
term nature and complexity of existing contractual 
agreements differences arising between the actual results 
and the assumptions made or future changes to such 
assumptions could necessitate future adjustments to 
tax income and expense already recorded differences 
of interpretation may arise on a wide variety of issues 
depending on the conditions prevailing in the respective 
group company’s domicile
deferred tax assets are recognised for all unused tax 
losses to the extent that it is probable that future taxable 
profits will be available against which the losses can be 
utilised significant management judgement is required 
to determine the amount of deferred tax assets that can 
be recognised based upon the likely timing and the 
level of future taxable profits together with future tax 
planning strategies
the group has tax losses carried forward amounting to 
£2323000 2010 £1908000 these losses relate to 
subsidiaries that have a history of losses do not expire 
and may not be used to offset taxable income elsewhere 
in the group the subsidiaries have no taxable temporary 
differences or any tax planning opportunities available 
that could partly support the recognition of these losses as 
deferred tax assets
further details on taxes are disclosed in note 6
3  business combinations
acquisition of calamares holding bv
on 3 may 2011 the group acquired 100 of the share 
capital of calamares holding bv an unlisted company 
based in the netherlands the principal activity of the 
calamares holding bv group is the provision of media 
asset management solutions 
the total cost of the combination comprises €29 million 
£26 million and was funded from the group’s existing 
cash resources 108
the provisional fair value of the identifiable assets and liabilities of calamares holding bv group as at the date of 
acquisition were
book value
£’000
provisional fair  
value to group
 
£’000
intangible assets  838
cash and cash equivalents  
other payables 13 13
deferred tax liabilities  214
net liabilities  assets 13 611
provisional goodwill arising on acquisition 1968
2579
all fair values included in the above analysis are provisional fair values which are based upon management’s best 
estimate at the date of preparation of the financial statements 
discharged by
£’000
fair value of contingent consideration 1254
cash paid to shareholders 1325
total cash payable 2579
cash outflow on the acquisition
net cash and cash equivalents acquired with the subsidiary  
total cash paid 1325
net cash outflow 1325
the maximum contingent consideration is £13 million the fair value has been calculated at £13 million and under 
ifrs 3 revised any remeasurement will be recognised in the income statement
from the date of acquisition calamares holding bv group has not materially affected the revenue or profitability of 
the group if the combination had taken place at the beginning of the year the profit for the group would have been 
£257 million and revenue from continuing operations would have been £2291 million included in the £20 million 
of goodwill recognised above are certain intangible assets that cannot be individually separated and reliably measured 
from the acquiree due to their nature these items include assembled workforce 
acquisition of language weaver inc in 2010
on 23 july 2010 the group acquired 100 of the share capital of language weaver inc an unlisted company based 
in the united states of america the principal activity of language weaver inc is the provision of machine statistical 
translation 
the total cost of the combination comprised 415 million £269 million and was funded from the group’s existing 
cash resources
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
109
the fair value of the identifiable assets and liabilities of language weaver inc group as at the date of acquisition were
book value
£’000
fair value 
to group
 
£’000
intangible assets  8539
property plant and equipment 1532 1532
cash and cash equivalents 1660 1660
trade receivables 1739 1739
other receivables 294 294
trade payables 63 63
other payables 3185 3185
finance lease payables 1226 1226
deferred tax liabilities  2391
net assets 751 6899
provisional goodwill arising on acquisition 19980
26879
discharged by
£’000
cash paid to shareholders 26879
cash outflow on the acquisition
net cash and cash equivalents acquired with the subsidiary 1660
total cash paid 26879
net cash outflow 25219
in 2010 from the date of acquisition language weaver inc contributed £43 million of revenue and a loss of £04 
million to the net profit after tax of the group if the combination had taken place at the beginning of the year the 
2010 profit for the group would have been £197 million and revenue from continuing operations would have been 
£2070 million included in the £200 million of goodwill recognised above are certain intangible assets that cannot be 
individually separated and reliably measured from the acquiree due to their nature the board consider that a significant 
value remains in assembled workforce buyer specific synergies and technical expertise
acquisition of xopus bv in 2010
on 29 june 2010 the group acquired 100 of the share capital of xopus bv an unlisted company based in the 
netherlands the principal activity of xopus bv is the provision of online xml editing 
the total cost of the combination comprised €15 million £12 million and was funded from the group’s existing cash 
resources 110
the fair value of the identifiable assets and liabilities of xopus bv as at the date of acquisition were
book value
£’000
fair value to group
 
£’000
intangible assets  510
property plant and equipment 18 18
cash and cash equivalents 298 298
trade receivables 52 52
other receivables 14 14
trade payables  
other payables 588 588
deferred tax liabilities  128
net liabilities  assets 206 176
provisional goodwill arising on acquisition 1055
1231
discharged by
£’000
fair value of contingent consideration 231
cash paid to shareholders 1000
total cash payable 1231
cash outflow on the acquisition
net cash and cash equivalents acquired with the subsidiary 298
total cash paid 1000
net cash outflow 702
the maximum contingent consideration is £16 million the fair value has been calculated at £02 million and under 
ifrs 3 revised any remeasurement will be recognised in the income statement
in 2010 from the date of acquisition xopus bv contributed £02 million of revenue and a loss of £01 million to the 
net profit after tax of the group if the combination had taken place at the beginning of the year the 2010 profit for 
the group would have been £220 million and revenue from continuing operations would have been £2037 million 
included in the £10 million of goodwill recognised above are certain intangible assets that cannot be individually 
separated and reliably measured from the acquiree due to their nature these items include assembled workforce 
4  segment information 
the group operates in the global information management industry for management purposes the group is 
organised into business units based on their products and services and has three reportable operating segments as 
follows 
•	 the language services segment is the provision of a translation service to customer’s multilingual content in 
multiple languages 
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
111
•	 the language technologies segment is the sale of enterprise desktop and statistical machine translation 
technology developed to help automate and manage multilingual assets together with associated consultancy and 
other services 
•	 the content management technologies segment is the sale of content management technologies developed to 
help automate and manage content to deliver a consistent interactive and personalised customer experience in 
multiple languages across websites documentation and channels
within the content management technologies segment three operating segments have been aggregated to form the 
above reportable operating segment
management 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 deferred compensation related to business 
combinations and amortisation 
year ended 31 december 2011
language 
services
£’000
language 
technologies
£’000
content 
management 
technologies
£’000
adjustments and 
eliminations
£’000
total
£’000
external revenue 136178 40096 52727  229001
total revenue 136178 40096 52727  229001
depreciation 1152 1397 521  3070
segment profit before tax 
and amortisation
25540 5246 8780 98 39664
amortisation
5903
profit before tax 33761
deferred compensation and contingent consideration relating to acquisitions
year ended 31 december 2010
language
 services
£’000
language 
technologies
£’000
content 
management 
technologies
£’000
adjustments and 
eliminations
£’000
total
£’000
external revenue 124646 33915 44988  203549
total revenue 124646 33915 44988  203549
depreciation 1351 740 470  2561
segment profit before 
tax and amortisation
25178 3321 7655 759 35395
amortisation 6587
profit before tax 28808
deferred compensation relating to acquisitions 112
language 
services
£’000
language 
technologies
£’000
content 
management 
technologies
£’000
adjustments and 
eliminations
£’000
total
£’000
segment assets
at 31 december 2011 54227 85027 75503
1
75893 290650
at 31 december 2010 53934 87280 76512
2
53929 271655
1 segment assets do not include cash £70408000 corporation tax £509000 and deferred tax £4976000
2 segment assets do not include cash £46628000 corporation tax £945000 and deferred tax £6356000
geographical analysis of external revenues by country of domicile is as follows
2011
£’000
2010
 
£’000
uk 49585 48524
usa 69317 52225
republic of ireland 23487 21313
netherlands 17354 15638
belgium 15805 14927
germany 15103 14257
canada 12750 12636
rest of world 25600 24029
229001 203549
a geographical analysis of external revenues by destination is provided in the operating and financial review on page 52
geographical analysis of noncurrent assets excluding deferred tax is as follows
2011
£’000
2010
£’000 
uk 119246 121805
usa 38483 40112
rest of world 4781 4614
162510 166531
goodwill and intangibles recognised on consolidation are included in the country which initially acquired the business 
giving rise to the recognition of goodwill and intangibles
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
113
5  other revenue and expenses
group operating profit is stated after charging  crediting
2011
£’000
2010
 
£’000
included in administration expenses
research and development expenditure 14763 13637
bad debt charge  credit 84 117
depreciation of property plant and equipment – owned assets 2536 2356
depreciation of property plant and equipment – leased assets 534 205
amortisation of intangible assets 5903 6587
operating lease rentals for plant and machinery 527 664
operating lease rentals for land and buildings 5884 5424
net foreign exchange gains 1544 1204
gain  loss on derivatives 441 38
the net foreign exchange gains  losses above arose due to movements in foreign currencies between the time of 
the original transaction and the realisation of the cash collection or spend and the retranslation of us dollar and euro 
denominated loans 
auditor’s remuneration
2011
£’000
2010
 
£’000
audit of the group financial statements 232 225
other fees to auditors
 local statutory audits for subsidiaries 43 33
 other taxation services 143 103
 other services 97 45 114
staff costs
2011
£’000
2010
 
£’000
wages and salaries 94954 83805
social security costs 11570 10071
pension costs included in administrative expenses 2727 2543
expense of sharebased payments 2867 1886
112118 98305
the company operates a personal pension scheme for qualifying employees other companies acquired have similar 
schemes for their qualifying members although sdl global solutions ireland limited operates a defined contribution 
scheme with contributions made by the company placed in a separately administered pension fund the pension cost 
charge for the year represents contributions payable by the group to these schemes and amounted to £2726670 
2010 £2543201
the average number of employees during the year including executive directors was made up as follows
2011
number
2010
 
number
administration and sales 817 720
production 1461 1350
2278 2070
finance costs
2011
£’000
2010
 
£’000
bank loans  
other interest paid 195 112
195 112
finance revenue
2011
£’000
2010
 
£’000
bank interest receivable 444 322
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
115
6  income tax
a income tax on profit
consolidated income statement
2011
£’000
2010
 
£’000
current taxation
uk income tax charge
current tax on income for the period 1411 1188
adjustments in respect of prior periods 16 177
underlying foreign tax credit  197
1395 1562
foreign tax
current tax on income for the period 8563 7906
adjustments in respect of prior periods 575 434
7988 7472
total current taxation 9383 9034
deferred income taxation
origination and reversal of temporary differences 1358 2342
adjustments in respect of prior periods  72
total deferred income tax 1358 2270
tax expense see b below 8025 6764
consolidated statement of other comprehensive income
2011
£’000
2010
 
£’000
current taxation
uk income tax credit
income tax benefit on currency translation differences on 
foreign currency equity loans to foreign subsidiaries
110 90
total current taxation 110 90 116
a tax credit in respect of sharebased compensation for current taxation of £523000 2010 credit of £557000 has been 
recognised in the statement of changes in equity in the year a tax debit in respect of sharebased compensation for 
deferred taxation of £821000 2010 credit of £342000 has been recognised in the statement of changes in equity in 
the year 
b factors affecting tax charge
the tax assessed on the profit on ordinary activities for the year is lower than the standard rate of income tax in the uk 
of 265 2010 28 the differences are reconciled below
2011
£’000
2010
 
£’000
profit on ordinary activities before tax 33761 28808
profit on ordinary activities at standard rate of tax in the uk 265 2010 
28
8947 8066
expenses not deductible for tax purposes 468 928
non deductible amortisation of intangibles 115 125
adjustments in respect of previous years 591 185
utilisation of tax losses brought forward previously not recognised 1912 2932
current tax losses not available for offset 693 416
effect of overseas tax rates 3 73
other 302 419
tax expense see a above 8025 6764
c factors that may affect future tax charges
the group may claim a schedule 23 tax credit in respect of certain sharebased compensation benefits due to the 
requirements of ias 12 in conjunction with ifrs 2 the amount of benefit that can be recognised in the income 
statement has been restricted in the current year and may also be restricted in future periods any surplus tax credit has 
been recorded in equity
there are temporary differences which arise in relation to unremitted earnings of overseas subsidiaries since the group 
is able to control dividend distributions from these companies it is unlikely that further uk tax on repatriation of these 
earnings will be payable in the foreseeable future consequently no deferred tax liability has been provided
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
117
d deferred income tax
the amounts recognised and unrecognised for deferred income tax are set out below
recognised
2011
£’000
unrecognised
2011
£’000
recognised
2010
£’000
unrecognised
2010
£’000
depreciation in advance of capital 
allowances
485  500 
other shortterm temporary differences 5360  6158 
tax losses 3004 2323 3422 1908
net deferred income tax liability  asset 1871 2323 2236 1908
the group has tax losses in net terms of £2323000 2010 £1908000 that may be available for use by offset against 
future taxable profits in the companies in which the losses arose deferred tax assets have not been recognised in 
respect of these losses as the group cannot foresee profitability in the companies where the losses arose with sufficient 
certainty the group has other tax losses amounting to £20984000 2010 £27544000
included within other short term temporary differences are deferred tax assets in respect of potential schedule 23 tax 
benefits of £1262000 2010 £1748000 and a deferred tax liability in respect of the amortisation of certain intangible 
assets acquired recognised in accordance with ias 38 of £6375000 2010 £8071000
at 31 december 2011 the net deferred income tax position is represented by a deferred income tax asset of £4976000 
2010 £6356000 and a deferred income tax liability of £6847000 2010 £8592000
e reconciliation of movement on deferred tax liability
2011
£’000
2010
 
£’000
at 1 january 8592 7298
retranslation of opening balances 98 103
deferred tax liability arising on intangible assets acquired 213 2518
reversal of temporary differences arising on the amortisation of intangibles 1564 945
other temporary differences arising in the period 8 107
change in rate from 27 to 2525 288 69
deferred tax liability at 31 december 6847 8592 118
f reconciliation of movement on deferred tax asset
2011
£’000
2010
 
£’000
at 1 january 6356 5621
retranslation of opening balances  14
temporary differences arising in the period 1254 149
deferred income tax asset arising on sharebased payments recorded in 
income statement
335 528
deferred income tax asset arising on sharebased payments recorded in 
statement of changes in equity
821 342
other temporary differences arising in the period 429 
change in rate from 27 to 2525 69 
deferred tax asset at 31 december 4976 6356
on 23 march 2011 the chancellor announced the reduction in the main rate of uk corporation tax to 26 with effect 
from 1 april 2011 and a further reduction to 25 with effect from 1 april 2012 these changes became substantively 
enacted on 29 march 2011 and 5 july 2011 respectively and therefore the effect of these rate reductions creates a 
reduction in the deferred tax asset of £69000 and a reduction in the deferred tax liability of £288000 which has been 
included in the figures above this reduction in rate has resulted in a net credit to deferred tax current tax charge of 
£219000
the chancellor proposed changes to further reduce the main rate of corporation tax by 1 per annum to 23 by 1 
april 2014 but these changes have not yet been substantively enacted and therefore are not included in the figures 
above the overall effect of the further reductions from 25 to 23 if these were applied to the deferred tax balance at 
31 december 2011 would be to further reduce the deferred tax asset by approximately £32000 
these reductions in the uk corporation tax rate will reduce the group’s future current tax charge
7  dividends
2011
£’000
2010
 
£’000
amounts recognised as distributions to equity holders in the 
year
final dividend for the year ended 31 december 2010 of 
55pence per share
4328 
a final dividend for the year ended 31 december 2011 of 58 pence per share will be proposed at the annual general 
meeting and has not been included as a liability in the financial statements
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
119
8  earnings per share 
the calculation of basic earnings per ordinary share is based on a profit after tax of £25736000 2010 £22044000 
and 78666436 2010 77640587 ordinary shares being the weighted average number of ordinary shares in issue 
during the period 
the diluted earnings per ordinary share is calculated by including in the weighted average number of shares the dilutive 
effect of potential ordinary shares related to committed share options as described in note 19 for 2011 the diluted 
ordinary shares were based on 81115987 ordinary shares that included 2449551 potential ordinary shares
the following reflects the income and share data used in the calculation of adjusted earnings per share computations
2011
£’000
2010
 
£’000
profit for the year 25736 22044
amortisation of intangible fixed assets 5903 6587
less tax benefit associated with the amortisation of intangible fixed assets 1564 1693
adjusted profit for the year 30075 26938
adjusted earnings per share is shown as the directors believe that earnings before amortisation is reflective of the 
underlying performance of the business
2011
no
2010
 
no
weighted average number of ordinary shares for basic earnings per share 78666436 77640587
effect of dilution resulting from share options 2449551 2680242
weighted average number of ordinary shares adjusted for the effect of dilution 81115987 80320829
2011 2010
adjusted earnings per ordinary share – basic pence 3823 3470
adjusted earnings per ordinary share – diluted pence 3708 3354
there have been no material transactions involving ordinary shares or potential ordinary shares between the reporting 
date and the date of completion of the financial statements 120
9  property plant and equipment
leasehold 
improvements
£’000
computer 
equipment
£’000
fixtures   
fittings
£’000
motor 
vehicles
£’000
total
£’000
cost
at 1 january 2010 1164 10781 2400 92 14437
additions 287 1869 291 43 2490
disposals 83 366 65 26 540
acquisition of subsidiaries  1550   1550
currency adjustment 42 201 20 2 221
at 1 january 2011 1410 14035 2606 107 18158
additions 231 2707 323  3261
disposals 34 4563 27 17 4641
acquisition of subsidiaries     
currency adjustment 1 75 32 2 110
at 31 december 2011 1606 12104 2870 88 16668
leasehold 
improvements
£’000
computer 
equipment
£’000
fixtures  
fittings
£’000
motor 
vehicles
£’000
total
£’000
accumulated depreciation
at 1 january 2010 642 7327 1394 69 9432
provided during the year 211 2006 325 19 2561
disposals 26 294 20 26 366
currency adjustment 27 190 8 1 208
at 1 january 2011 854 9229 1691 61 11835
provided during the year 185 2492 376 17 3070
disposals 14 4510 15 16 4555
currency adjustment 6 73 17 1 97
at 31 december 2011 1019 7138 2035 61 10253
net book value
at 31 december 2011 587 4966 835 27 6415
at 1 january 2011 556 4806 915 46 6323
included in property plant and equipment are assets held under finance lease of £607000 at 31 december 2011 2010 
£1132000 
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
121
10  intangible assets
customer 
relationships
£’000
intellectual 
property
£’000
goodwill
£’000
total
£’000
cost 
at 1 january 2010 9355 44021 122682 176058
acquisition of subsidiaries 1840 7209 21035 30084
currency adjustment 77 735 1340 2152
at 1 january 2011 11118 50495 142377 203990
acquisition of subsidiaries 22 816 1968 2806
currency adjustment 52 419 850 1321
at 31 december 2011 11088 50892 143495 205475
amortisation
at 1 january 2010 3658 22573 12203 38434
provided during the year 2081 4506  6587
currency adjustment 51 285  336
at 1 january 2011 5688 26794 12203 44685
provided during the year 1789 4114  5903
currency adjustment 33 224  257
at 31 december 2011 7444 30684 12203 50331
net book value
at 31 december 2011 3644 20208 131292 155144
at 1 january 2011 5430 23701 130174 159305
customer relationships and intellectual property are written off on a straightline basis over their estimated useful lives 
of between 5 and 15 years as from 1 january 2004 the date of transition to ifrs goodwill is no longer amortised but is 
now subject to annual impairment testing see note 12  122
 11  investments in subsidiaries 
 
details of the investments excluding dormant companies in which the group or company holds more than 20 of the 
nominal value of ordinary share capital are as follows
name of company
country of 
incorporation holding
proportion of 
voting rights nature of business
held directly
sdl sheffield limited england  wales ordinary 100 language services
software  documentation localisation france 
sarl
france ordinary 100 language services
sdl sweden ab sweden ordinary 100 language services
sdl global solutions ireland limited ireland ordinary 100 language services 
and language 
technologies
sdl international belgium nv belgium ordinary 100 language services
sdl software technology shenzhen co ltd china ordinary 100 language services
sdl inc united states of 
america
ordinary 100 holding company
sdl poland sp zoo poland ordinary 100 language services
sdl international america inc united states of 
america
ordinary 100 language services
sdl japan kk japan ordinary 100 language services
sdl holdings bv netherlands ordinary 100 holding company
sdl do brasil servicos de traduçao ltda brazil ordinary 100 language services
sdl trisoft nv belgium ordinary 100 content 
management 
technologies
sdl enterprise technologies inc united states of 
america
ordinary 100 language 
technologies
sdl multilingual solutions private ltd india ordinary 100 language services
sdl hellas mepe greece ordinary 100 language services
automated language processing services ltd england  wales ordinary 100 holding company
sdl turkey translation services  commerce ltd turkey ordinary 100 language services
sdl chile sa chile ordinary 100 language services
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
123
name of company
country of 
incorporation holding
proportion of 
voting rights nature of business
held indirectly
sdl passolo gmbh germany ordinary 100 language 
technologies
sdl italia srl italy ordinary 100 language services
sdl spain sl spain ordinary 100 language services
sdl international nederland bv netherlands ordinary 100 language services
sdl international canada inc canada ordinary 100 language services
sdl nederland holding bv netherlands ordinary 100 language services
sdl tridion holding bv netherlands ordinary 100 holding company
sdl multilingual services gmbh  co kg germany ordinary 100 language services
sdl multilingual solutions singapore pte ltd singapore ordinary 100 language services
sdl magyaror szaj szolgaltato kft hungary ordinary 100 language services
sdl cz sro czech republic ordinary 100 language services
sdl traduceri srl romania ordinary 100 language services
sdl zagreb llc croatia ordinary 100 language services
sdl doo ljubljana slovenia ordinary 100 language services
trados gmbh germany ordinary 100 language 
technologies
sdl tridion corporate services bv netherlands ordinary 100 content 
management 
technologies
sdl tridion development centre llc ukraine ordinary 100 content 
management 
technologies
sdl tridion development lab bv netherlands ordinary 100 content 
management 
technologies
sdl tridion gmbh germany ordinary 100 content 
management 
technologies
tridion ab sweden ordinary 100 content 
management 
technologies
sdl tridion bv netherlands ordinary 100 content 
management 
technologies 124
name of company
country of 
incorporation holding
proportion of 
voting rights nature of business
sdl tridion bvba belgium ordinary 100 content 
management 
technologies
sdl tridion hispania sl spain ordinary 100 content 
management 
technologies
sdl tridion sas france ordinary 100 content 
management 
technologies
sdl tridion ltd england  wales ordinary 100 content 
management 
technologies
sdl tridion inc united states of 
america
ordinary 100 content 
management 
technologies
sdl tridion kk japan ordinary 100 content 
management 
technologies
interlingua group ltd england  wales ordinary 100 holding company
alp services inc united states of 
america
ordinary 100 holding company
sdl multilingual service gmbh germany ordinary 100 holding company
sdl verwaltung gmbh germany ordinary 100 holding company
sdl quatron bv netherlands ordinary 100 content 
management 
technologies
zao sdl rus russia ordinary 100 language services
xyenterprise inc united states of 
america
ordinary 100 content 
management 
technologies
xyenterprise ltd england  wales ordinary 100 content 
management 
technologies
fredhopper group bv netherlands ordinary 100 holding company
fredhopper holding bv netherlands ordinary 100 holding company
fredhopper bv netherlands ordinary 100 content 
management 
technologies
fredhopper ltd england  wales ordinary 100 content 
management 
technologies
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
125
name of company
country of 
incorporation holding
proportion of 
voting rights nature of business
spring technologies ltd bulgaria ordinary 100 content 
management 
technologies
sdl xopus bv netherlands ordinary 100 content 
management 
technologies
language weaver inc united states of 
america
ordinary 100 language 
technologies
language weaver srl romania ordinary 100 language 
technologies
sdl media manager holding bv netherlands ordinary 100 holding company
sdl media manager bv netherlands ordinary 100 content 
management 
technologies
the proportion of voting rights held as at 31 december 2011 is as shown above there have been no changes during 
2011 with the exception of the acquisition of sdl media manager holding group formerly calamares holding bv and 
formation of sdl chile sa
 
12  impairment testing of goodwill and intangibles with indefinite lives
the group has goodwill that has been acquired through business combinations but does not hold any intangible assets 
that have indefinite lives ascribed to them 
the approach of the group is to test impairment at the cash generating unit level this is the lowest level of unit at 
which the group is effectively able to manage and monitor performance cash flow and goodwill four cash generating 
units have been determined for testing language services language technologies web content management and 
structured content management where possible the goodwill has been allocated for impairment testing purposes 
to these cash generating units and full attribution of overheads and group costs has been made to each of the units in 
testing impairment 
in order to evaluate the recoverable amounts relating to the cashgenerating units the following key information should 
be noted
the recoverable amount has been determined using the detailed projections from the 2012 annual plan projected for 
a five year period and subsequently into perpetuity with a discount rate applied differential discount rates were used 
reflecting a different risk weighting based on relative maturity and size of the different cash generating units with 102 
applied to language services 2010 106 119 to language technologies 2010 123 111 to web content 
management 2010 115 and 113 to structured content management 2010 117 these reflect the relative 
maturity of the businesses and in aggregate approximate a group cost of capital of 108 for 2011 2010113 the 
budget has been prepared at the cash generating unit level based on historical trends adjusted for expected events 
these individual budgets have been aggregated as the basis for the 2012 annual plan the discount rate has been 
calculated as the weighted average cost of capital 126
this methodology places strong emphasis on early year cash flows in evaluating impairment the valuation is on a 
value inuse basis but has retained average perpetual growth rates from the 31 used in 2010 differential perpetual 
growth rates have been used reflecting the relative maturity penetration and profile of the cash generating units with 
2 applied to the language services business and 4 applied to the language technologies business web content 
management business and structured content management business whilst the rates of growth vary across individual 
cash generating units a long term average growth rate for the 5 years preperpetuity of 8 has been used for the tests 
when considering sdl as a whole differential growth rates have been applied to the different cashgenerating units 
according to market growth projections of 510 for language services 1015 for language technologies and 515 
for web content management and structured content management it should be noted that whilst there is increasing 
linkage between the cash generating units in terms of cross selling and mutual exploitation of synergy no benefits have 
been assumed here
carrying amount of goodwill allocated to cashgenerating units
2011
£’000
2010
 
£’000
language services 21050 21047
language technologies 64327 64503
web content management 36280 34958
structured content management 9635 9666
131292 130174
sensitivity to changes in assumptions
having performed its impairment tests and having analysed the various sensitivities to these tests management believe 
that no reasonably possible change in any of the above key assumptions would cause the carrying value of the relevant 
units to exceed their recoverable amounts
next impairment test
the next impairment tests will be performed at the 2012 year end however management continues to monitor the 
performance of its cash generating units closely and should it believe a significant event has occurred which deteriorates 
the forward operating prospects of the business it will move to bring forward these tests 
13  trade and other receivables current
2011
£’000
2010
 
£’000
trade receivables 40858 42601
corporation tax 509 945
prepayments and accrued income 11389 8594
52756 52140
all amounts are due within one year trade receivables are noninterest bearing and on average have thirty to sixty 
day settlement terms accrued income is the value of unbilled work recognised on projects in accordance with the 
accounting policy outlined in note 2
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
127
accrued income includes £78000 of accrued bank interest receivable 2010 £50000
as at 31 december 2011 trade receivables at nominal value of £890000 2010 £869000 were impaired and provided 
for movements in the provision for impairment of receivables were as follows
total
£’000
at 1 january 2010 1088
acquired companies provision at date of acquisition 
credit for the year 117
utilised in the year 87
currency adjustment 15
at 31 december 2010 869
acquired companies provision at date of acquisition 
charge for the year 84
utilised in the year 23
currency adjustment 40
at 31 december 2011 890
as at 31 december the ageing analysis of trade receivables is as follows
past due but not impaired
total
£’000
not past 
due nor 
impaired
£’000
30 days
£’000
3060 days
£’000
60 days
£’000
2011 40858 36070 3593 616 579
2010 42601 35789 5050 1093 669
14  cash and cash equivalents
2011
£’000
2010
 
£’000
cash at bank and in hand 70408 46628
cash at bank and in hand earns interest at floating rates based on daily bank deposit rates the fair value of cash and 
cash equivalents is £70408000 2010 £46628000 
at 31 december 2011 the group had available £20000000 2010 £20000000 of undrawn committed borrowing 
facilities in respect of which all conditions precedent had been met
for the purposes of the cash flow statement cash and cash equivalents comprise the amounts shown above 128
15  trade and other payables current
2011
£’000
2010
 
£’000
trade payables 5964 6660
other taxes and social security costs 2729 2044
other payables 2327 3637
accruals and deferred income 42469 42290
53489 54631
the terms and conditions of the above financial liabilities are as follows
trade payables are noninterest bearing and are normally settled within 45 days
other taxes and social security costs are noninterest bearing and have an average term of 1 month
other payables generally are noninterest bearing and have an average term of 2 months
16  trade and other payables noncurrent
2011
£’000
2010
 
£’000
other payables 1102 622
1102 622
other payables include amounts payable under finance lease arrangements for purchase of property plant 
and equipment
the amounts payable under finance leases are set out below
future
 minimum 
lease 
payments
2011
£’000
interest
2011
£’000
present 
value of 
minimum lease 
payments
2011
£’000
future
 minimum 
lease 
payments
2010
£’000
interest
2010
£’000
present 
value of 
minimum lease 
payments
2010
£’000
within one year 460 29 431 429 73 356
after one year but not 
more than five years
140  140 622 38 584
600 29 571 1051 111 940
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
129
17  provisions
property leases
£’000
other
£’000
total
£’000
at 1 january 2011 578 1394 1972
released during the year 50 200 250
arising during the year  355 355
utilised 77 602 679
at 31 december 2011 451 947 1398
current 2011 51 788 839
noncurrent 2011 400 159 559
451 947 1398
current 2010 91 1133 1224
noncurrent 2010 487 261 748
578 1394 1972
property leases
the provision for property leases is in respect of closed leasehold premises from which the group no longer trades 
but is liable to fulfil rent and other property commitments up to the lease expiry date obligations are payable within 
a range of one to 10 years amounts have been provided on current rentals and are management’s best estimate of 
the likely future cash outflows the company entered into a sublease during 2010 with an initial rent free period the 
provision has been discounted using market interest rates the undiscounted provision is £569000 2010 £706000
other
other provisions include a number of employee legal and product related amounts obligations are expected to be 
payable within 13 years 
18  share capital
allotted called up and fully paid
2011 
thousands
2010 
thousands
2011 
£
2010 
£
ordinary shares of 1p each
  at 1 january 78008 76966 780089 769666
  issued on exercise of share options 325 706 3246 7060
  issued on exercise of ltips 762 288 7616 2881
  issued on exercise of saye scheme 118  1180 
  issued on acquisition of subsidiaries  48  482
  at 31 december 79213 78008 792131 780089 130
the following movements in the ordinary share capital of the company occurred during the year
1 324595 ordinary shares of 1p each were allotted under the sdl share option scheme 1999 sdl share option 
scheme 2010 and earlier unapproved option schemes at a price range of 60 pence to 375 pence per share for an 
aggregate consideration of £602858
2 761617 ordinary shares of 1p each were allotted under the sdl ltip scheme at a price of 1 pence per share for an 
aggregate consideration of £7616
3 118030 ordinary shares of 1p each were allotted under the sdl save as you earn scheme at a price range of 256 to 
286 pence per share for an aggregate consideration of £302656
19  sharebased payment plans
on 23 april 2010 following shareholder approval the “sdl share option scheme 2010” was adopted this replaced 
the “sdl share option scheme 1999” for which options are still exercisable the sdl share option scheme 2010 
permits the granting of both options approved by hm revenue and customs within the statutory £30000 limit 
and unapproved options subject to performance conditions from 2010 onwards all options have been granted in 
accordance with these rules 
the sdl long term share incentive plan which was approved by shareholders in april 2006 “the 2006 plan” expired 
for the purposes of new awards in april 2011 no further awards could be made after the expiry date but existing 
awards will remain protected although they will only vest to the extent that the related performance conditions are met
  
the 2006 plan has been replaced with the sdl long term share incentive plan 2011 “the 2011 plan” which received 
approval from shareholders in april 2011 the 2011 plan is broadly similar in construction it has been updated to reflect 
current law and market practice and the proposed performance conditions are designed to be more closely aligned to 
the company’s current business strategy and objectives 
on 18 may 2011 161940 shares were granted under the 2011 plan to the executive directors when the market price 
was £670 with a performance period of three years from date of grant senior management employees received 
awards of 443535 and 26772 on 18 may 2011 and 1 july 2011 respectively
on 24 april 2008 a save as you earn saye scheme was formally approved by the shareholders at the agm the original 
2008 scheme matured in 2011 and has provided good returns for participating employees following the success of the 
uk saye schemes in 2011 an international version was rolled out to sdl plc’s subsidiary companies in the netherlands 
the rules are based on those of the uk in that employees must be eligible and there is a monthly savings contract over a 
3 year period in 2011 options were granted to both uk and netherlands scheme participants at 80 of the prevailing 
market price the market price is taken the day prior to the date of invitations to apply for an option there are no 
performance conditions attached to the exercise of these options these options may be exercised within a fixed six
month period three years from the date of grant or being made redundant
the expense recognised for all sharebased payments in respect of employee services received during the year to 31 
december 2011 is £2867000 2010 £1886000 
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
131
sdl share option scheme
the table below sets out the number and weighted average exercise prices waep of and movements in the sdl share 
options scheme during the year
2011 
no
2011 
waep
2010 
no
2010 
waep
outstanding at the beginning of the year 1375987 £237 2002040 £211
granted during the year 189574 £670 235851 £473
forfeited during the year 71809 £388 143712 £327
exercised during the year 324595 £186 705962 £223
expired during the year 13000 £083 12230 £230
outstanding at the end of the year 1156157 £315 1375987 £237
exercisable at 31 december 616903 £172 769565 £147
the weighted average share price at the date of exercise for the options exercised is £633 2010 £488
for the share options outstanding as at 31 december 2011 the weighted average remaining contractual life is 595 years 
2010 594 years 
the fair value of equity settled share options granted under the sdl share option scheme is estimated as at the date of 
grant using the black scholes model the following table lists the inputs and key output to the model
2011 2010
weighted average share price pence 670 473
weighted average fair value at grant date pence 199 203
expected volatility 43 47
expected option life 4 years 4 years
expected dividends 1 1
riskfree interest rate 15 2 132
the range of exercise prices for options outstanding at the end of the year was £034  £607 2010 £034£548
 
date of grant exercise period
2011 
number
2010 
number
£001  £050 230203 10 years after grant date 46000 46000
£051  £100 260901121203 10 years after grant date  173270
£101  £150 020404040405 10 years after grant date 344334 345034
£151  £200 070401 10 years after grant date  2250
£201  £250 220306031006 10 years after grant date 24950 29375
£251  £300 280208020309 10 years after grant date 359191 522638
£351  £400 23507 10 years after grant date 11500 47250
£451  £500 120410 10 years after grant date 153490 168163
£501  £550 100910 10 years after grant date 36462 42007
£651  £700 180511 10 years after grant date 180230 
total 1156157 1375987
sdl long term incentive plan
the fair value of equitysettled shares granted under the sdl long term incentive plan is estimated as at the date of 
grant using a montecarlo model taking into account the terms and conditions upon which the options were granted 
the following table lists the inputs and key output to the model used in the year of grant
2011 2010
expected volatility 43 47
weighted average fair value at grant date pence 426 402
expected life 3 years 3 years
expected dividends 1 1
riskfree interest rate 15 14  2
2011 
no
2011 
waep
2010 
no
2010 
waep
outstanding at the beginning of the year 2576916  2233838 
granted during the year 632244  730314 
exercised during the yea 761617  288140 
forfeited during the year 142807  99096 
outstanding at the end of the year 2304736  2576916 
exercisable at 31 december nil  nil 
all ltips are exercisable at nil cost to the individual with the exception of the 1p nominal value of each share awarded
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
133
sdl save as you earn scheme
the table below sets out the number and weighted average exercise prices waep of and movements in the sdl save 
as you earn scheme during the year
2011
no
2011 
waep
2010
no
2010 
waep
outstanding at the beginning of the year 163650  184216 
granted during the year 109457   
exercised during the year 118030  
forfeited during the year 5510  20566 
outstanding at the end of the year 149567  163650 
exercisable at 31 december nil  nil 
for the saye shares outstanding as at 31 december 2011 the weighted average remaining contractual life is 193 years 
2010 137 years 
 
the fair value of equity settled share options granted under the sdl saye scheme is estimated as at the date of grant 
using the black scholes model the following table lists the inputs and key output to the model in the year of grant
2011
weighted average share price pence 520
expected volatility 41
expected option life 35 years
expected dividends 1
riskfree interest rate 11
for all share based payment models the volatility is calculated from compounded daily logs of normal returns of the 
company share price over a historic period commensurate with the expected life of the incentive
20  additional cash flow information
analysis of group net debt
1 january
 2011
£’000
cash 
flow
£’000
debt 
acquired 
on acquisition
£’000
exchange 
differences
 
£’000
31 december 
2011
£’000
cash and cash equivalents 46628 23981  201 70408
loans     
46628 23981  201 70408 134
1 january
 2010
£’000
cash 
flow
£’000
debt 
acquired 
on acquisition
£’000
exchange 
differences
 
£’000
31 december 
2010
£’000
cash and cash equivalents 46160 333  135 46628
loans     
46160 333  135 46628
21  commitments and contingencies
the group has entered into commercial leases on certain properties used as offices the future minimum rentals 
payable under noncancellable operating leases as at 31 december are as follows
land and buildings other total
 2011
£’000
 2010
£’000
 2011
£’000
 2010
£’000
 2011
£’000
 2010
£’000
within one year 4819 4408 884 1085 5703 5493
after one year but not more 
than five years
10442 8822 649 899 11091 9721
more than five years 4538 3141  16 4538 3157
19799 16371 1533 2000 21332 18371
during the year the group has sublet a commercial lease and the future minimum rentals receivable under non
cancellable operating leases as at 31 december 2011 were £481000 2010 £580000 
22  related party disclosures
compensation of key management personnel of the group 
2011
£’000
2010
 
£’000
short term employee benefits 1863 1386
post employment benefits 89 82
gains on disposal of ltips 1129 483
total compensation paid to key management personnel 3081 1951
transactions between group companies which are related parties have been eliminated on consolidation and have not 
been included in this note
23  financial risk management objectives and policies
an explanation of the group’s financial instrument risk management objectives policies and strategies are set out in the 
operating and financial review on pages 50 to 59
interest rate risk interest rate risk is not significant in 2011 as the group has had no borrowings during the year at the 
balance sheet date the group retains committed facilities to the value of £20 million 
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
135
to ensure adequate working capital the group maintains cash deposits and these deposits are affected by any 
movements in rates of interest generally these cash deposits are generally receiving interest income at libor or usd 
euro equivalent plus a margin the group seeks to place all cash surplus to operational requirements in secure money 
market funds to enhance the interest earning capacity of the group processes have been put in place to ensure that 
cash balances held by subsidiary companies are kept as low as operationally possible with regard to relative interest 
rates adequate cash is retained in key operating currencies to fund the operational needs of the group 
the following table demonstrates the sensitivity to a 1 percent change in the uk £ interest rate
proft before tax gainloss
2011
£’000
2010 
£’000
 1  286 88
 1  286 88
the following table demonstrates the sensitivity to a 1 percent change in the euro interest rate
proft before tax gainloss
2011
£’000
2010 
£’000
 1  164 122
 1  164 122
the following table demonstrates the sensitivity to a 1 percent change in the us interest rate
proft before tax gainloss
2011
£’000
2010 
£’000
 1  127 119
 1  127 119
liquidity risk the group’s objective is to optimise the funds currently available to it in order to maintain the lowest 
operational borrowing profile necessary at the end of 2011 the group had no external borrowings and approximately 
£70 million of net cash underpinning this philosophy are processes to manage operating cash flow with a focus on 
approvals policy for significant cash outlays and credit control
foreign currency risk a significant amount of business is done with customers in both the usa and continental europe 
with approximately 47 of total invoicing done in us dollar and 35 in euro the most significant sensitivity is to the 
us dollar as illustrated below this overseas client base gives rise to shortterm debtors and cash balances in both us 
dollars and euros consequently the movements in the us dollarsterling and eurosterling exchange rates affect the 
group balance sheet as well as the consolidated income statement the group seeks to manage this risk in the first 
instance by looking to a natural hedge and ensuring where possible currency needs in the usa are funded from the 
settlement of us dollar denominated debtors after a review of effectiveness the group has not entered into any new us 
dollar hedges since 2008 at the end of 2011 the group has no hedges outstanding 
in addition the group has exposure on the balance sheet to the movements in us dollarsterling and eurosterling 
exchange rates as a result of intangible assets held in non functional currency the retranslation of us and continental 
european overseas subsidiaries net assets into uk sterling for consolidation purposes and finally intercompany loan and 
trading relationships held in non functional currency in the case of the latter this can have an impact on net profitability 
where the intercompany relationships are not treated for accounting purposes as equity loans  136
the consolidated income statement is also affected by movements in the us dollarsterling and eurosterling exchange 
rates when sales to customers are converted to sterling at the date of the sales transaction as this will vary from month 
to month this is partially offset by the effect of retranslating us dollar and euro denominated costs into uk sterling 
from month to month
the following table demonstrates the sensitivity to a 1 cent change in the us dollar exchange rate
2011
£’000
2010
 
£’000
proft before tax gainloss
 1cent 289 259
 1 cent 293 262
statement of financial position increasedecrease in net assets
 1cent 492 474
 1 cent 498 480
the following table demonstrates the sensitivity to a 1 cent change in the euro exchange rate
2011
£’000
2010
 
£’000
proft before tax gainloss
 1 cent 59 38
 1 cent 60 39
statement of financial position increasedecrease in net assets
 1 cent 1031 1010
 1 cent 1048 1027
 based on the statement of financial position at 31 december
economic conditions – credit control risk given the economic conditions at the end of 2011 sdl continues to benefit 
from a diverse list of major clients of which no client contributes more than 5 of sales the group is however 
continuing to place emphasis on sound application of credit control processes given the recent deterioration in 
macroeconomic conditions the group has made provision against trade receivables to reflect specific collection risks 
identified 
capital management the board monitors the total equity and the cash and cash equivalents balance in considering its 
retained capital and when and how a return of capital to shareholders is appropriate the group maintains a strong 
capital base so as to maintain employee customer market investor and creditor confidence in the business and to 
ensure that it continues to operate as a going concern the annual dividends have increased by 55 the strategy of 
the board is to pursue strong profitable growth by reinvesting operating cash flows into the business whilst offering a 
nominal return to those investors who value a yield in addition to growth
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
137
24  derivatives and other financial instruments
interest rate risk profile of financial assets and liabilities
the interest rate profile of the financial assets and liabilities of the group as at 31 december is as follows
at 31 december 2011
floating rate
within 1 
year
£’000
12 
years
£’000
23 
years
£’000
34 
years
£’000
45 
years
£’000
more 
than 5 
years
£’000
total
£’000
cash 70408      70408
at 31 december 2010
floating rate
within 1 
year
£’000
12 
years
£’000
23 
years
£’000
34 
years
£’000
45 
years
£’000
more 
than 5 
years
£’000
total
£’000
cash 46628      46628
maturity of financial liabilities
the table below summarises the maturity profile of the group’s financial liabilities at 31 december 2011
less than 
12 months
£’000
over12 
months
£’000
total
£’000
other liabilities 839 1661 2500
trade and other payables 11120  11120
11959 1661 13620
the above table excludes accruals and deferred income 
the table below summarises the maturity profile of the group’s financial liabilities at 31 december 2010
less than 
12 months
£’000
over12 
months
£’000
total
£’000
other liabilities 1224 1370 2594
trade and other payables 12341  12341
13565 1370 14935
the above table has been restated to exclude accruals and deferred income
the fair value of the contingent consideration is estimated by reviewing purchase documentation and forecast 
information this represents a level 3 measurement in the fair value hierarchy under ifrs 7 contingent consideration is 
cash therefore has been recorded as a liability any subsequent remeasurement to this liability will be recorded in the 
income statement 138
borrowing facilities
the group has one borrowing facility available to it at 31 december 2011 the facility available was £20 million 2010 
£20 million the borrowing facility has been renegotiated in the year to extend the facility until 2014 
credit risk
under the rbs facility agreement the sdl group is required to retain at least 60 of its cash held by the group within 
a charging group defined as a list of charging subsidiaries and the borrower sdl plc this exposes the group to 
counterparty risk based on the banks with whom the charging group holds cash deposits the most significant 
counterparty risk is with rbs the maximum credit risk exposure related to financial assets is represented by the carrying 
value as at the balance sheet date 
fair values of financial assets and liabilities
the carrying value of financial assets and liabilities approximate their fair value fair values of assets and liabilities are 
based on their carrying values the directors consider that there were no material differences between the book values 
and fair values of all the group’s financial assets and liabilities at each yearend the fair values have been calculated 
using the market interest rates where applicable 
there are no hedging arrangements in place as at 31 december 2011 2010 none 
the group had no outstanding borrowings on loan facilities held with rbs at 31 december 2011or 2010 and therefore 
had no sensitivity to interest rate risk on these facilities at the balance sheet date the interest rates that the group would 
pay under the facilities are linked directly to the 3month libor rate 
25  events after the statement of financial position date
on 27 january 2012 the group acquired 100 of alterian plc a company listed on the london stock exchange and 
based in england for £687 million of which £487 million was funded from the group’s existing cash reserves and 
£200 million was drawn against the group’s existing bank facility the principal activities of alterian plc are the 
provision of data analytics campaign management and social media capabilities the chairman’s statement describes 
the primary reasons for the business combination annual disclosures required under ifrs 3 revised will be included 
in the 31 december 2012 annual financial statements and in the 30 june 2012 interim financial statements once the 
initial accounting for the business combination has been undertaken 
there are no other known events occurring after the statement of financial position date that require disclosure the 
directors are recommending that a final dividend for the year ended 31 december 2011 of 58 pence per ordinary share 
be paid to the shareholders whose names appear on the register at the close of business on 18 may 2012 with payment 
on 15 june 2012 the exdividend date will be 16 may 2012 this recommendation will be put to the shareholders at the 
annual general meeting
notes to the accounts sdl annual report and financial statements 2011 
4
statutory information
139
notes
2011
£’000
2010
£’000
fixed assets
tangible assets 2 753 677
investments in subsidiaries 3 143903 142424
rent deposits 35 35
144691 143136
current assets 
debtors amounts falling due within one year 4 44961 39552
debtors amounts falling due after more than one year 4  7856
cash at bank and in hand 31184 11224
76145 58632
creditors amounts falling due within one year 5 72747 63186
net current assets liabilities 3398 4554
total assets less current liabilities 148089 138582
creditors amounts falling due after one year 6 6397 6542
provisions for liabilities and charges 7 1110 1240
140582 130800
capital and reserves
called up share capital 89 792 780
share premium account 9 95875 94974
profit and loss account 9 43915 35046
total equity 140582 130800
approved by the board of directors on 16 march 2012
j hunter       m knight
director       director  
company balance sheet
at 31 december 2011
company balance sheet 140
1  accounting policies
the principal accounting policies that have been consistently applied in arriving at the financial information set out in 
this report are
accounting convention
the financial statements are prepared under the historical cost convention as modified for certain items which have 
been measured at fair value namely financial instruments the financial statements are presented in accordance with 
applicable accounting standards in the united kingdom
basis of preparation of consolidated financial statements
no profit and loss account is presented for the company as permitted by section 408 of the companies act 2006 the 
company’s result for the year is shown in note 12
fixed assets and depreciation
depreciation is provided to write off the cost less the estimated residual value of tangible fixed assets over their 
estimated useful economic lives as follows
leasehold improvements   the lower of ten years or the lease term straight line
computer equipment  45 years straight line
fixtures  fittings  20 reducing balance
motor vehicles  20 reducing balance
leases
assets acquired under finance leases and hire purchase 
contracts are capitalised and the outstanding future 
obligations are shown in creditors operating lease rentals 
are charged to the profit and loss account on a straight
line basis over the period of the lease operating lease 
income is credited to the profit and loss account on a 
straightline basis over the period of the lease
 
incentives received from landlord
in accordance with uitf 28 the aggregate benefit of 
incentives is recognised as a credit to the profit and loss 
account the benefits of the incentives are allocated over 
the life of the lease on a straight line basis
pension cost
the company contributes to a group personal pension 
scheme for qualifying employees whereby it makes defined 
contributions to independently administered personal 
pension schemes the company does not control any of 
the assets or have any ongoing liabilities with regard to 
the performance of and payments from these individual 
personal schemes 
no tes t o the accounts
for the year ended 31 december 2011
notes to the company balance sheet
foreign currencies
transactions in foreign currencies are recorded using the 
rate of exchange ruling at the date of the transaction 
monetary assets and liabilities denominated in foreign 
currencies are translated using the rate of exchange 
ruling at the balance sheet date and the gains or losses on 
translation are included in the profit and loss account
the currency translation differences on retranslation of the 
foreign branches at the balance sheet date are recognised 
directly in equity
financial instruments
the company uses forward foreign currency contracts and 
options to reduce exposure to foreign exchange rates the 
company also uses interest rate swaps to adjust interest 
rate exposures such instruments are stated at fair value 
gains and losses arising from changes in fair value are 
taken to the profit and loss account in the period 
the group’s consolidated financial statements contain 
financial instrument disclosures which comply with frs 
29 ‘financial instruments disclosures’ consequently the 
company has taken advantage of the exemption in frs 29 
not to present separate financial instrument disclosures for 
the company sdl annual report and financial statements 2011 
4
statutory information
141
software licence and related services’ contract revenue is 
recognised over the period that the obligation exists per 
the contract 
taxation
the charge for taxation is based on the profit for the year 
and takes into account taxation deferred arising from 
timing differences between the treatment of certain items 
for taxation and accounting purposes 
deferred tax is recognised in respect of all timing 
differences that have originated but not reversed at the 
balance sheet date where transactions or events have 
occurred at that date that will result in an obligation to pay 
more or a right to pay less or to receive more tax with 
the following exceptions 
  provision is made for tax on gains arising from fair 
value adjustments of fixed assets and gains on 
disposal of fixed assets that have been rolled over 
into replacement assets only to the extent that at 
the balance sheet date there is a binding agreement 
to dispose of the assets concerned however no 
provision is made where on the basis of all available 
evidence at the balance sheet date it is more likely 
than not that the taxable gain will be rolled over into 
replacement assets and charged to tax only where the 
replacement assets are sold
  provision is made for deferred tax that would arise 
on remittance of the retained earnings of overseas 
subsidiaries only to the extent that at the balance 
sheet date dividends have been accrued as receivable
  deferred tax assets are recognised only to the extent 
that the directors consider that it is more likely than 
not that there will be suitable taxable profits from 
which the future reversal of the underlying timing 
differences can be deducted
deferred tax is measured on an undiscounted basis at the 
tax rates that are expected to apply in the periods in which 
timing differences reverse based on tax rates and laws 
enacted or substantively enacted at the balance sheet date
national insurance contributions on share option 
gains
following the issuance of uitf abstract 25 “national 
insurance contributions on share option gains” the 
company makes provision for the national insurance 
contributions on a straightline basis over the vesting 
period of the options and as remeasured each 
research and development
research and development costs are written off as incurred 
in the year of expenditure 
revenue
revenue is recognised to the extent that it is probable that 
the economic benefits will flow to the company and the 
revenue can be measured reliably for multiple element 
arrangements revenue is allocated to each element on 
fair value regardless of any separate prices stated within 
the contract the portion of the revenue allocated to an 
element is recognised when the revenue recognition 
criteria for that element have been met the following 
specific recognition criteria must also be met before 
revenue is recognised
rendering of services
revenue on service contracts is recognised only when 
their outcomes can be foreseen with reasonable certainty 
and is based on the percentage stage of completion of 
the contracts calculated on the basis of costs incurred 
accrued and deferred revenue arising on longterm service 
contracts is included in debtors as accrued income and 
creditors as deferred income as appropriate 
support and maintenance contracts are invoiced in 
advance and normally run for periods of 12 months with 
automatic renewal on the anniversary date revenue 
in respect of support and maintenance contracts is 
recognised evenly over the 12 months commencing from 
the date of the contract period
managed services hosting fees are recognised over the 
term of the hosting contract on a straightline basis
professional services and consulting revenue which is 
provided on a ‘time and expense’ basis is recognised as 
the service is performed
sale of goods
revenue from the sale of goods is recognised when the 
significant risks and rewards of ownership of the goods 
have passed to the buyer usually on despatch of the 
goods
revenue on software licenses and upgrades is recognised 
on despatch when there are no significant vendor 
obligations remaining and the collection of the resulting 
receivable is considered probable in circumstances where 
a considerable future vendor obligation exists as part of a  142
appropriate when financial liabilities are recognised 
initially they are measured at fair value plus in the case 
of financial liabilities not at fair value through profit and 
loss directly attributable transaction costs the company 
determines the classification of its financial liabilities at 
initial recognition and reevaluates this designation at each 
financial year end
a financial liability is generally derecognised when the 
contract that gives rise to it is settled sold cancelled or 
expires
where an existing financial liability is replaced by another 
from the same lender on substantially different terms or 
the terms of an existing liability are substantially modified 
such an exchange or modification is treated as a de
recognition of the original liability and the recognition of 
a new liability such that the difference in the respective 
carrying amounts together with any costs or fees incurred 
are recognised in profit or loss
financial liabilities at fair value through profit and loss 
constitute financial guarantee contracts the fair value is 
calculated based on an assessment of both the likelihood 
that the financial guarantee would be called upon and 
expected cash flows which could arise liabilities are 
carried in the balance sheet at fair value and reevaluated 
at each financial year end with gains or losses recognised 
in the profit and loss account
provisions
provisions are recognised when the company has 
a present obligation as a result of a past event and 
management believe it to be probable that the company 
will be required to settle that obligation provisions 
are measured at management’s best estimate of the 
expenditure required to settle the obligation at the balance 
sheet date and are discounted to net present value where 
this is deemed to be material
bank borrowings
interest bearing bank loans are recorded at the proceeds 
received net of direct issue costs finance charges 
including premiums payable on settlement and direct 
issue costs are accounted for on an accruals basis in the 
profit and loss account using the effective rate of interest 
method
sharebased payments
employees including directors of the company receive 
remuneration in the form of sharebased payment 
period thereafter until the options are exercised the 
remeasurement is based upon the share price at the year
end
cash flow statement
the company has taken advantage of the exemption 
granted by financial reporting standard 1 to not present a 
cash flow statement
related party transactions
the company has taken advantage of the exemption 
granted by financial reporting standard 8 from disclosing 
related party transactions with entities that are 100 
owned by the sdl plc group
investments
investments are recorded at cost
investments denominated in foreign currency are recorded 
using the rate of exchange at the date of acquisition and 
reviewed annually for evidence of impairment
financial assets
investments
investments in subsidiaries and associates are stated at cost 
less any provision for impairment in value
investments in unquoted equity investments which do not 
have a reliable market value are stated at cost less provision 
for any impairment in value for investments where there 
is an actively traded market the investment is stated at fair 
value determined by reference to a quoted market bid 
price at the close of business on the balance sheet date
cash
cash in bank represents cash in hand and deposits 
repayable with any qualifying institution
debtors
debtors are recorded at initial measurement and are 
provided for where management consider an element of 
the balance to be irrecoverable 
financial liabilities
financial liabilities are recognised when the company 
becomes party to the contracts which give rise to them 
and are classified as financial liabilities at fair value 
through the profit and loss or loans and payables as 
notes to the company balance sheet sdl annual report and financial statements 2011 
4
statutory information
143
the company has taken advantage of the transitional 
provisions of frs 20 in respect of equitysettled awards 
and has applied frs 20 only to equitysettled awards 
granted after 7 november 2002 that had not vested at 1 
january 2005
in accordance with uitf 25 national insurance on share 
option grants the anticipated national insurance charge 
on gains made by employees over the period from date of 
grant of the option to the end of the performance period 
has been provided for 
group and treasury share transactions
where a parent entity grants rights to its equity 
instruments to its employees of a subsidiary and such 
sharebased compensation is accounted for as equity
settled in the consolidated financial statements of the 
parent frs 20 requires the subsidiary to record an 
expense for such compensation with a corresponding 
increase recognised in equity as a contribution from the 
parent consequently in the financial statements of the 
company the company recognises an increase in fixed 
asset investments or amounts owed by group companies 
for the aggregate amount of these contributions with a 
credit to equity for the same amount
transactions whereby employees render services in 
exchange for shares or rights over shares ‘equitysettled 
transactions’
equitysettled transactions
the cost of equitysettled transactions with employees 
is measured by reference to the fair value at the date at 
which they are granted and is recognised as an expense 
over the vesting period which ends on the date on which 
the relevant employees become fully entitled to the award 
fair value is determined by using an appropriate option 
pricing model in valuing equitysettled transactions no 
account is taken of any vesting conditions other than 
conditions linked to the price of the shares of the company 
market conditions 
the cost of equitysettled transactions is recognised 
together with a corresponding increase in equity ending 
on the date on which the relevant employees become 
entitled to the award ‘vesting date’ the cumulative 
expense recognised for equity settled transactions at each 
reporting date until the vesting date reflects the extent 
to which the vesting period has expired and the number 
of awards that in the opinion of the directors of the 
company at that date based on the best available estimate 
of the number of equity instruments that will ultimately 
vest
no expense is recognised for awards that do not ultimately 
vest except for awards where vesting is conditional 
upon a market condition which are treated as vesting 
irrespective of whether or not the market condition is 
satisfied provided that all other performance conditions 
are satisfied 
where the terms of an equitysettled award are modified 
as a minimum an expense is recognised as if the terms had 
not been modified in addition an expense is recognised 
for any increase in the value of the transaction as a result of 
the modification as measured at the date of modification
where an equitysettled award is cancelled it is treated 
as if it had vested on the date of cancellation and any 
expense not yet recognised for the award is recognised 
immediately however if a new award is substituted for 
the cancelled award and designated as a replacement 
award on the date that it is granted the cancelled and new 
awards are treated as if they were a modification of the 
original award as described in the previous paragraph 144
2  tangible fixed assets
leasehold 
improvements
£’000
computer 
equipment
£’000
fixtures  
 fittings
£’000
motor 
vehicles
 
£’000
total
£’000
cost
at 1 january 2011 582 4231 1580 26 6419
currency adjustment 1 6 2  9
additions  402 10  412
disposals 14 3709 739  4462
at 31 december 2011 567 918 849 26 2360
depreciation
at 1 january 2011 435 3805 1476 26 5742
currency adjustment 1 5 1  7
provided during the year 22 290 22  334
disposals 14 3709 739  4462
at 31 december 2011 442 381 758 26 1607
net book value
at 31 december 2011 125 537 91  753
at 31 december 2010 147 426 104 ‑ 677
the net book value of assets held under finance leases is £nil as at 31 december 2011 2010 £nil
3  investments in subsidiaries
details of the investments in which the company holds more than 20 of the nominal value of ordinary share capital 
are given in note 11 of the group financial statements
 
£’000
cost and net book value as at 1 january 2011 142424
adjustment re share option charge 1479
cost and net book value as at 31 december 2011 143903
notes to the company balance sheet sdl annual report and financial statements 2011 
4
statutory information
145
4  debtors 
2011
£’000
2010
 
£’000
debtors amounts falling due within one year
trade debtors 4815 6257
amounts owed by group undertakings 36038 29088
corporation tax 6 
deferred income tax asset 1265 1687
prepayments and accrued income 2837 2520
44961 39552
accrued income is the value of unbilled work recognised on projects per the accounting policy outlined in note 1
debtors amounts falling due after more than one year
amounts owed by group undertakings  7856
 7856
amounts owed by group undertakings included an intra group loan of us 12300000 £7856000 to sdl 
international america inc this usd loan facility was drawn down on 30 june 2009 for ten years and bears interest of 
26 being adjusted on a biannual basis for any movements in libor
the amounts recognised and unrecognised for deferred income tax are set out below
recognised 
2011
£’000
unrecognised 
2011
£’000
recognised 
2010
£’000
unrecognised 
2010
£’000
depreciation in advance of capital allowances 349  389 
other shortterm temporary differences 192  647 
sharebased payments 724  651 
tax losses  186  200
net deferred income tax asset 1265 186 1687 200
reconciliation of movement on deferred tax asset
2011
£’000
2010
 
£’000
at 1 january 1687 1059
temporary differences arising in the period 422 628
deferred tax asset at 31 december 1265 1687
the company has tax losses in net terms of £186000 2010 £200000 that may be available for use by offset against 
future taxable profits deferred tax assets have not been recognised in respect of these losses as the company cannot 
foresee profitability with sufficient certainty 146
5  creditors amounts falling due within one year
2011
£’000
2010
 
£’000
trade creditors 1200 1288
amounts owed to group undertakings 62922 53608
corporation tax 1454 1540
other taxes and social security costs 1132 558
other creditors 249 263
accruals and deferred income 5715 5854
deferred tax liability 75 75
72747 63186
reconciliation of movement on deferred tax liability 
2011
£’000
2010
 
£’000
at 1 january 75 73
temporary differences arising in the period  2
deferred tax liability at 31 december 75 75
6  creditors amounts falling due after more than one year
2011
£’000
2010
 
£’000
amounts owed to group undertakings 6320 6465
other creditors 77 77
6397 6542
amounts owed to group undertakings comprise intra group loans of €4000000 £3065000 2010 £3427000 from 
sdl global solutions ireland limited and ¥ 377612000 £3255000 2010 £3038000 from sdl japan kk both 
the euro and yen loan facilities were drawn down on 1 july 2008 for five year terms and bear interest of 3 2010 
2 and 12 2010 155 respectively on balances at 31 december being adjusted on an annual basis for any 
movements in libor
notes to the company balance sheet sdl annual report and financial statements 2011 
4
statutory information
147
7  provisions for liabilities and charges
2011
£’000
2010
 
£’000
property leases 451 578
other 659 662
1110 1240
movement in provisions
provision 1 
january 2011
£’000
arising 
during the 
year
£’000
released 
during the 
year
£’000
utilised 
during the 
year
 
£’000
provision 31 
december
 2011
£’000
property leases 578  50 77 451
other 662 94  97 659
1240 94 50 174 1110
property leases
the provision for property leases is in respect of closed leasehold premises from which the company no longer trades 
but is liable to fulfil rent and other property commitments up to the lease expiry dates obligations are payable within 
a range of one to 10 years amounts have been provided on current rentals and are management’s best estimate of 
the likely future cash outflows the company entered into a sublease during 2010 with an initial rent free period the 
provision has been discounted using market interest rates the undiscounted provision is £569000 2010 £706000
other provisions
other provisions include employee and legal amounts  148
8  share capital
allotted called up and fully paid
2011 
thousands
2010 
thousands
2011 
£
2010 
£
ordinary shares of 1p each 
  at 1 january 78008 76966 780089 769666
  issued on exercise of share options 325 706 3246 7060
  issued on exercise of ltips 762 288 7616 2881
  issued on exercise of saye scheme 118  1180 
  issued on acquisition of subsidiaries  48  482
  at 31 december 79213 78008 792131 780089
the following movements in the ordinary share capital of the company occurred during the year
1 324595 ordinary shares of 1p each were allotted under the sdl share option scheme 1999 sdl share option 
scheme 2010 and earlier unapproved option schemes at a price range of 60 pence to 375 pence per share for an 
aggregate consideration of £602858
2 761617 ordinary shares of 1p each were allotted under the sdl ltip scheme at a price of 1 pence per share for an 
aggregate consideration of £7616
3 118030 ordinary shares of 1p each were allotted under the sdl save as you earn scheme at a price range of 256 to 
286 pence per share for an aggregate consideration of £302656 
9  share premium and reserves
share
capital
£’000
share
premium
account
£’000
shares
to be
issued
£’000
profit 
loss
account
 
£’000
total
£’000
at 1 january 2010 770 93207 203 18815 112995
profit for the period    14203 14203
currency translation differences on 
net investments
   142 142
arising on share issues 10 1564   1574
arising on acquisition of passolo  203 203  
sharebased payments    1886 1886
at 1 january 2011 780 94974  35046 130800
profit for the period    81 81
dividend received    10299 10299
dividend paid    4328 4328
currency translation differences on 
net investments
   50 50
arising on share issues 12 901   913
sharebased payments    2867 2867
at 31 december 2011 792 95875  43915 140582
all amounts are attributable to equity holders of the parent
notes to the company balance sheet sdl annual report and financial statements 2011 
4
statutory information
149
10  commitments and contingencies 
the company had annual commitments under operating leases as set out below
land and 
buildings
2011
£’000
other
2011
£’000
total
2011
£’000
land and 
buildings
2010 
£’000
other
2010
£’000
total
2010
£’000
leases expiring
within one year 104  104 5  5
after one year but not 
more than five years
 10 10 886 2 888
more than five years 932  932 185  185
1036 10 1046 1076 2 1078
11  sharebased payment plans
on 23 april 2010 following shareholder approval the “sdl share option scheme 2010” was adopted this replaced 
the “sdl share option scheme 1999 for which options are still exercisable the sdl share option scheme 2010 
permits the granting of both options approved by hm revenue and customs within the statutory £30000 limit 
and unapproved options subject to performance conditions from 2010 onwards all options have been granted in 
accordance with these rules 
the sdl long term share incentive plan which was approved by shareholders in april 2006 “the 2006 plan” expired 
for the purposes of new awards in april 2011 no further awards could be made after the expiry date but existing 
awards will remain protected although they will only vest to the extent that the related performance conditions are met 
the 2006 plan has been replaced with the sdl long term share incentive plan 2011 “the 2011 plan” which received 
approval from shareholders in april 2011 the 2011 plan is broadly similar in construction it has been updated to reflect 
current law and market practice and the proposed performance conditions are designed to be more closely aligned to 
the company’s current business strategy and objectives 
on 18 may 2011 161940 shares were granted under the 2011 plan to the executive directors based on a market price of 
£670 with a performance period of three years from date of grant senior management employees received awards of 
443535 and 26772 on 18 may 2011 and 1 july 2011 respectively
on 24 april 2008 a save as you earn saye scheme was formally approved by the shareholders at the agm the original 
2008 scheme matured in 2011 and has provided good returns for participating employees following the success of the 
uk saye schemes in 2011 an international version was rolled out to sdl plc’s subsidiary companies in the netherlands 
the rules are based on those of the uk in that employees must be eligible and there is a monthly savings contract 
over a 3 year period in in 2011 options were granted to both uk and netherlands scheme participants at 80 of the 
prevailing market price the market price is taken the day prior to the date of invitations to apply for an option there 
are no performance conditions attached to the exercise of these options these options may be exercised within a fixed 
sixmonth period three years from the date of grant or being made redundant
the expense recognised for all sharebased payments in respect of employee services received during the year to 31 
december 2011 is £1388000 2010 £803000  150
sdl share option scheme
the table below sets out the number and weighted average exercise prices waep of and movements in the sdl share 
options scheme during the year
2011 
no
2011 
waep
2010 
no
2010 
waep
outstanding at the beginning of the year 1375987 £237 2002040 £211
granted during the year 189574 £670 235851 £473
forfeited during the year 71809 £388 143712 £327
exercised during the year 324595 £186 705962 £223
expired during the year 13000 £083 12230 £230
outstanding at the end of the year 1156157 £315 1375987 £237
exercisable at 31 december 616903 £172 769565 £147
the weighted average share price at the date of exercise for the options exercised is £633 2010 £488
for the share options outstanding as at 31 december 2011 the weighted average remaining contractual life is 595 years 
2010 594 years 
the fair value of equity settled share options granted under the sdl share option scheme is estimated as at the date of 
grant using the black scholes model the following table lists the inputs and key output to the model
2011 2010
weighted average share price pence 670 473
weighted average fair value at grant date pence 199 203
expected volatility 43 47
expected option life 4 years 4 years
expected dividends 1 1
riskfree interest rate 15 2
notes to the company balance sheet sdl annual report and financial statements 2011 
4
statutory information
151
the range of exercise prices for options outstanding at the end of the year was £034£670 2010 £034£548
date of grant exercise period
2011 
number
2010 
number
£001  £050 230203 10 years after grant date 46000 46000
£051  £100 260901121203 10 years after grant date  173270
£101  £150 020404040405 10 years after grant date 344334 345034
£151  £200 070401 10 years after grant date  2250
£201  £250 220306031006 10 years after grant date 24950 29375
£251  £300 280208020309 10 years after grant date 359191 522638
£351  £400 230507 10 years after grant date 11500 47250
£451  £500 120410 10 years after grant date 153490 168163
£501  £550 100910 10 years after grant date 36462 42007
£651  £700 180511 10 years after grant date 180230 
total 1156157 1375987
sdl long term incentive plan
the fair value of equitysettled shares granted under the sdl long term incentive plan is estimated as at the date of 
grant using a montecarlo model taking into account the terms and conditions upon which the options were granted 
the following table lists the inputs and key output to the model used in the year of grant
2011 2010
expected volatility 43 47
weighted average fair value at grant date pence 426 402
expected life 3 years 3 years
expected dividends 1 1
riskfree interest rate 15 142
2011 
no
2011 
waep
2010 
no
2010 
waep
outstanding at the beginning of the year 2576916  2233838 
granted during the year 632244  730314 
exercised during the year 761617  288140 
forfeited during the year 142807  99096 
outstanding at the end of the year 2304736  2576916 
exercisable at 31 december nil  nil 
all ltips are exercisable at nil cost to the individual with the exception of the 1p nominal value of each share awarded 152
sdl save as you earn scheme
the table below sets out the number and weighted average exercise prices waep of and movements in the sdl save 
as you earn scheme during the year
2011 
no
2011 
waep
2010 
no
2010 
waep
outstanding at the beginning of the year 163650  184216 
granted during the year 109457   
exercised during the year 118030   
forfeited during the year 5510  20566 
outstanding at the end of the year 149567  163650 
exercisable at 31 december nil  nil 
for the saye shares outstanding as at 31 december 2011 the weighted average remaining contractual life is 193 years 
2010 137 years 
the fair value of equity settled share options granted under the sdl saye scheme is estimated as at the date of grant 
using the black scholes model the following table lists the inputs and key output to the model in the year of grant
2011
weighted average share price pence 520
expected volatility 41
expected option life 35 years
expected dividends 1
riskfree interest rate 11
for all share based payment models the volatility is calculated from compounded daily logs of normal returns of the 
company share price over a historic period commensurate with the expected life of the incentive
notes to the company balance sheet sdl annual report and financial statements 2011 
4
statutory information
153
12  profit attributable to members of the parent 
company
the profit dealt within the financial statements of the parent 
company is £81000 2010 £14203000 no profit and loss account 
is presented for the company as permitted by section 408 of the 
companies act 2006
13  post balance sheet events
on 27 january 2012 the company acquired 100 of alterian plc 
a company listed on the london stock exchange and based in 
england for £687 million of which £487 million was funded from 
the group’s existing cash reserves and £200 million was drawn 
against the group’s existing bank facility the principal activities of 
alterian plc is the provision of data analytics campaign management 
and social media capabilities the executive chairman’s statement 
describes the primary reasons for the business combination 
there are no other known events occurring after the statement of 
financial position date that require disclosure the directors are 
recommending that a final dividend for the year ended 31 december 
2011 of 58 pence per ordinary share be paid to the shareholders 
whose names appear on the register at the close of business on 
18 may 2012 with payment on 15 june 2012 the exdividend 
date will be 16 may 2012 this recommendation will be put to the 
shareholders at the annual general meeting 154
2011
£’000
2010
£’000
2009
£’000
2008
 
£’000
2007
£’000
year ended 31 december
turnover notes 1 2 3 4 and 5 229001 203549 171878 158775 117409
growth in turnover 13 18 8 35 24
operating profit before 
depreciation and amortisation
42734 37746 31375 27223 18699
operating profit 33512 28598 23587 19850 12899
profit before tax 33761 28808 24013 19850 12725
profit after tax 25736 22044 17953 14540 9170
fixed assets 161559 165628 142629 142749 105540
cash and cash equivalents 70408 46628 46160 31227 21511
net current assets 58854 32587 33216 22492 14351
total assets less current liabilities 226340 205474 182285 172337 125429
equity interests 217832 195512 173105 163029 113016
average number of employees 2278 2070 1950 1932 1721
earnings per share – basic 
adjusted for movements in 
capital notes 1 2 3 4 and 5
3272p 2839p 2355p 1921p 1307p
notes
1  2007 – acquisition of tridion group and passolo
2  2008 – acquisition of trisoft nv and idiom technologies inc
3  2009 – acquisition of xyenterprise inc and fredhopper group bv
4  2010 – acquisition of xopus bv and language weaver inc
5  2011– acquisition of calamres holding bv group 
five year summary
five y ear group summary sdl annual report and financial statements 2011 
4
statutory information
155
directors
mark lancaster executive chairman 
john hunter chief executive officer
matthew knight chief financial officer
chris batterham
john matthews
joe campell
jane thompson
david clayton
mandy gradden
secretary
pamela pickering
auditor
kpmg audit plc
15 canada square
london
e14 5gl
bankers
national westminster bank plc
abbey gardens
4 abbey street
reading
rg1 3ba
solicitors
dla piper 
3 noble street
london
ec2v 7ee
registrars
capita registrars
northern house
woodsome park
fenay bridge
huddersfield
west yorkshire
hd8 0la
stockbrokers
investec henderson crosthwaite corporate finance  singer capital markets ltd
a division of investec bank uk limited 
2 gresham street  one hanover street
london  london
ec2v 7qp  w1s 1yz
registered office
globe house
clivemont road
maidenhead 
berkshire
sl6 7dy
corporate information
corporate information 156
sdl enables global businesses to engage with their customers in the language the media and at the
moment they choose we help businesses manage their brands drive global
revenues accelerate speedtomarket and enrich their customers’ experience
sdl’s enterpriseready innovative technology and service solutions span the entire customer journey
and include social listening and marketing analytics campaign management
language management and services video and written content creation web content
management dynamic technical documentation publication and ecommerce
sdl solutions drive global reach across multiple languages cultures channels and media sdl
has over 1500 enterprise customers 400 partners and over 185000 desktop software licenses
worldwide sdl has a global infrastructure of more than 70 offices in 38 countries for more
information visit wwwsdlcom


Summary:
 chief executive 
officer’s statement
14
summary
at sdl our vision is that we believe everyone should 
be able to engage with the information they require 
in the way they want and our mission is to enable 
global businesses to engage with their customers in the 
language the media and at the moment they chose 
our core value proposition is to support businesses in 
increasing brand equity and driving revenues on a global 
basis and we seek to do this by providing enterprise ready 
innovative solutions to manage the endtoend customer 
experience  
our strategic objective is to deliver superior returns to 
shareholders through execution of a growth strategy on 
five key dimensions key account growth cross selling 
partner channels and strategic partnership territory 
expansion and technology leadership and innovation 
i am pleased to report that we made positive progress 
in all of these areas in 2011 which proved to be a 
strong year in terms of financial performance and was 
also an exceptional year for new client acquisition and 
for releasing new innovative products to the global 
marketplace
revenue for the year was £2290m 2010 £2035m 
an excellent performance against a mixed demand 
environment which varied region by region and segment 
by segment all businesses contributed positive revenue 
growth in 2011 headline revenue growth of 13 includes 
acquisition related growth of 2 a 1 decrease due 
to foreign exchange and underlying organic growth 
at constant currency of 12 performance in content 
management continued to be particularly strong with 
constant currency revenue growth of 19 driven by 
demand for sdl tridion 2011 a new product release 
to the global marketplace and continued penetration 
of structured content products into the burgeoning 
technical documentation marketplace increased cross 
selling activity has also underpinned growth moving 
into 2012 the sales pipeline remains robust reflective of 
new win momentum and we see no discernible change 
in decision patterns for buying sdl solutions despite an 
uncertain economy 
operating cashflow from operations was £326m 2010 
£271m average dso was stable which was particularly 
pleasing in a challenging environment for many 
corporations and ensured that the business maintained 
strong cash flow during the year at the end of 2011 we 
had £704m of cash on the balance sheet which combined 
with £20m of undrawn revolving credit facilities provided 
a robust base for the completion of the alterian acquisition 
on 27 january 2012 
segmental performance
we continue to report the business in three operating 
segments in 2011 this change was initiated in 2009 and 
enables our shareholders to more fully understand the 
principal business lines of the group performance by 
segment is as follows  
content management technologies contributing 
£527m or 23 of revenue to the group and £88m or 
22 of group pbta 2010 contributing £450m or 22 of 
revenue to the group and £77m or 22 of group pbta
total segment revenue grew by 17 comprising 2 
foreign exchange a negligible effect from acquisitions and 
19 underlying organic growth at constant currency 
this is a very strong performance where the business 
continued to differentiate its products and solutions 
through a compelling program of innovation which 
delivered significant new product releases in 2011 
sdl web content management solutions performed 
well particularly in north america the new sdl tridion 
2011 product was launched at the start of 2011 with new 
mobile targeting and personalisation capabilities this 
release was cited by both forrester and gartner as a leader 
and has gained significant traction in the global market 
building on the established reputation of sdl tridion
our web content management solutions were further 
enhanced by the small but strategic calamares acquisition 
a cloud based enterprise solution for managing video and 
other rich media assets this new capability now branded 
sdl media manager is fully integrated with sdl tridion 
2011 and supports a broad range of media systems 
and devices including web mobile internet protocol 
television iptv and various social media platforms we 
expect the use of live and on demand video to increase 
significantly as we move forward against an environment 
where consumer preference for video related content as a 
preferred media is also growing rapidly 
structured content technologies continued to make 
exceptional progress in both the established s1000d and 
emerging dita markets important sales were made in 
asia a relatively immature market for these products with 
interest seeded creating a solid platform for future growth 
we are also proud to have released sdl livecontent 2011 
during the year this is a stepchange enabling product 
which automates the production of smart interactive 
product documentation we believe that sdl offers the 
most complete endtoend solution for creating and 
managing user documentation vital to the endtoend 
user experience sdl annual report and financial statements 2011 
1
sdl overview
15
new clients in 2011 include compassion international 
gamestop mcb group sharp eva air abu dhabi airport 
company brother life technologies corporation osisoft 
tibco software inc and mattel
language technologies contributing £401 million or 
18 of revenue to the group and £52 million or 13 of 
group pbta 2010 contributing £339 million or 17 of 
revenue to the group and £33 million or 9 of group pbta 
total segment revenue grew by 18 comprising 1 
foreign exchange 11 acquisitions and 8 underlying 
growth at constant currency the business made 
significant progress in driving profitability in 2011 and 
also established a very strong program of innovation to 
continue sdl leadership in the language technology 
space in the future our portfolio of products delivers 
innovation to users ranging from individual translators 
to global enterprises at our core is a philosophy of 
introducing technologies that change the way people 
work driving efficiency and consistency in global business 
operations in deriving optimal performance from complex 
language assets      
in 2011 we saw the market and appetite for machine 
translation continue to grow and we continued to invest 
in building our fundamental science capability in this 
important area we believe machine translation will have 
a profound future impact on the global marketplace for 
language and will form a significant component of future 
translation strategies for some rapidly growing content 
types language weaver is now fully integrated into the 
language technology business unit and has achieved 
strong sales growth over the equivalent period last year 
 
demand for our enterprise language technology business 
was mixed with stronger demand in europe than in north 
america during the year we saw momentum build for 
our desktop product sdl trados studio 2011 which we 
released to the global marketplace in september 2011 
we continued to invest in building our asia presence 
which we believe will be an important future market for 
language technology products and we see increasing 
interest from asian corporations in optimising processes 
for management of language assets 
new clients in 2011 included agip alfa laval ab nordea 
bank denmark tencent inc ricoh company ltd and 
panasonic business services co ltd
language services contributing £1362 million or 59 
of group revenue and £255 million or 65 of group 
pbta 2010 contributing £1246 million or 61 of group 
revenue and £252 million or 71 of group pbta 
2011 was a year of strong revenue growth for this segment 
and the business continued to exhibit solid growth 
characteristics and strong profit and cash generation it 
was an exceptional year for new client acquisition across 
the business which more than offset any individual 
customer variations as the business further intensified its 
account management approach the business continued 
to develop its global infrastructure to drive target territory 
presence and gained new business in latin america and 
australia we are also seeing progress in the nordic region 
following organisational changes previously initiated 
headline revenue growth of 9 was achieved comprising 
1 foreign exchange and 10 underlying growth at 
constant currency 
north america was the star performer with excellent 
revenue growth against a demand environment that 
proved highly resilient with europe also growing 
positively performance in asia was mixed and the business 
did an outstanding job of maintaining effective operations 
through the natural disasters in japan and thailand 
invoking contingency plans to continue to operate 
effectively with our clients in this period this is a tribute to 
the quality of the sdl team in asia our client portfolio in 
asia continues to expand and i am confident in our future 
growth prospects and positioning in the region founded 
on a high quality wholly owned local operation 
we see the market for language services starting to 
segment quality is an absolute in this market and we 
were very pleased to further expand our quality systems 
and certifications in 2011 essential components of a 
premium offer to our global clients machine translation 
is also having an impact as new content types start to 
emerge for certain applications we see more demand for 
consulting approaches that target process optimisation as 
companies wrestle with the challenge of how to effectively 
leverage language assets for brand consistency and how to 
drive innovation though new product release into global 
markets we continue to concentrate on ensuring sdl 
has the most comprehensive solution set in the global 
marketplace to directly address these needs right through 
the endtoend translation supply chain   
significant new client wins during the year included marks 
 spencer hotelde ag semcon springer healthcare ltd 
and kosan crisplant 
john hunter
chief executive officer
“we have confidence in our strategy and execution capability and we have 
a strong balance sheet which gives us the ability to pursue strategic growth 
opportunities both organically and through acquisition” 2 sdl strategy
16 sdl annual report and financial statements 2011 
2
sdl strategy
17