Rws Holdings Plc · LSE:RWS
Rws — H1 2018 Earnings Presentation
34 slides from Rws's earnings presentation, Jun 7, 2018
Slide 1: Half Year Results
Half Year Results 7 June 2018 Andrew Brode Richard Thompson Desmond Glass Chairman Chief Executive Officer Chief Financial Officer
Slide 2: Overview
RWS 2018© HALF YEAR RESULTS Overview A transformational period for RWS Completed $320m Strong performances Moravia grew sales and won acquisition of Moravia, from Life Sciences, Patent new clients, albeit forex and establishing the Group as Information and lower volumes from a few one of the world’s
Slide 3: Financial highlights
RWS 2018© HALF YEAR RESULTS Financial highlights Sales Moravia contribution Adjusted PBT* £139.6m 5 months £28.6m + 82% £52.1m revenue + 47% + 5% organic, constant FX £4.7m adjusted operating profit + 12% organic, constant FX H1 2017: £76.6m H1 2017: £19.4m Adjusted EPS* Net debt Interim dividend 8.
Slide 4: Highly specialized services
RWS 2018© HALF YEAR RESULTS Highly specialized services 5% 5% 10% 8% 35% 37% Revenue Revenue Revenue for FY for FY for H1 20% 27% 2016 65% 2017 60% 2018 4% 5% 19% Patent Translation Patent Life Language Moravia & Filing Information Sciences Solutions 3
Slide 5: Financial Review 2018
Financial Review 2018
Slide 6: Income statement
RWS 2018© HALF YEAR RESULTS Income statement Strong revenue growth 6 months ended 6 months ended › Acquisition of Moravia 31 March 2018 31 March 2017 › Full period contribution from LUZ & AOP (£m) (£m) › Organic growth Revenue 139.6 76.6 Cost of sales (84.7) (43.1) Margin trend reflects margin mix f
Slide 7: Year-on-year segmental revenue analysis
RWS 2018© HALF YEAR RESULTS Year-on-year segmental revenue analysis Underlying revenue growth H1 2018 H1 2017 YoY YoY Currency Acquisition Underlying* Patent Translation & Filing Impact Impact YoY (£m) (£m) (£m) (%) (£m) (£m) (£m) +1% Patent Information Patent Translation & 49.47 49.61 (0.14) (0.2%)
Slide 8: Segmental operating margin analysis
RWS 2018© HALF YEAR RESULTS Segmental operating margin analysis Patent Patent Language Translation & Life Sciences Moravia Information Solutions Filing 15% Revenue 49.5 4.8 26.2 7.0 52.1 6% Adjusted operating profit* 15.5 1.7 8.0 0.6 4.7 2% Adjusted operating profit 51% Adjusted operating margin 31%
Slide 9: Group currency analysis
RWS 2018© HALF YEAR RESULTS Group currency analysis H1 2018 currency analysis H1 2017 currency analysis Revenue by currency Operating costs by currency 70% 45% 60% 40% 35% 50% 30% 40% 25% 30% 20% 15% 20% 10% 10% 5% 0% 0% USD EUR GBP CZK Other USD EUR GBP CZK Other › Average USDGBP exchange rate in H
Slide 10: Balance sheet and cash flow
RWS 2018© HALF YEAR RESULTS Balance sheet and cash flow As at As at 6 months ended 6 months ended Balance sheet 31 March 2018 30 September 2017 Cash flow 31 March 2018 31 March 2017 (£m) (£m) (£m) (£m) Non-current assets 386.0 169.5 Profit before tax 18.3 14.3 Trade and other receivables 67.7 41.7 A
Slide 11: Adjusted profit before tax bridge
RWS 2018© HALF YEAR RESULTS Adjusted profit before tax bridge 35 30 (1.6) 2.2 3.5 28.6 (0.8) 5.9 25 20 19.4 15 10 5 0 2017 Effect of acquisitions* Trading performance Interest on additional MtM of forward contracts Net exchange differences 2018 debt 10 * Includes 5 months trading from Moravia and 6
Slide 12: Operational Review 2018
Operational Review 2018
Slide 13: The Group at a glance
The Group at a glance RWS 2018© HALF YEAR RESULTS Patent Translation & Filing Life Sciences Language Solutions › World’s premier provider of › Technical translations and › Non-patent or life science patent translation and filing linguistic validation for translations with a particular pharmaceutical
Slide 14: Moravia acquisition
RWS 2018© HALF YEAR RESULTS Moravia acquisition Rationale › Creates an RWS division of critical mass in a highly attractive adjacent market › Provides further diversification, with strengthened operating base in EU › Differentiated ability to source and manage talent globally › Increased global foot
Slide 15: Moravia
RWS 2018© HALF YEAR RESULTS Moravia New client wins and growth of existing clients. Integration and cost base review on track. Moravia 5 months to March Moravia 5 months to March Revenue (£m) Revenue ($m) Benefitting from cross-selling New and existing business 55 90 work provided by other RWS growt
Slide 16: Moravia operating performance and cost reduction strategy
RWS 2018© HALF YEAR RESULTS Moravia operating performance and cost reduction strategy Analysis Plan › Adversely affected by FX › Structural reorganization to improve › Slow revenue from new business wins both focus (on new business) and › One forecasted project did not communications materialize › R
Slide 17: Patent Translation & Filing
RWS 2018© HALF YEAR RESULTS Patent Translation & Filing Excellent cross-selling opportunities across full suite of IP services and into other key divisions. Already seeing cross-selling with AOP Patent Translation & Filing Patent Translation & Filing and Life Sciences. Revenue (£m) Profit (£m) Total
Slide 18: Patent Information
RWS 2018© HALF YEAR RESULTS Patent Information Continued strong growth as a result of Search and PatBase business. Integration of AOP on track. Patent Information Patent Information Revenue (£m) Profit (£m) 6 Strong LFL* revenue AOP fully integrated into 3.0 growth of 11% RWS Total: £4.8 5 › Search:
Slide 19: Life Sciences
RWS 2018© HALF YEAR RESULTS Life Sciences Integration of CTi and LUZ complete: one brand addressing the needs of pharmaceutical, CRO and medical device customers. Life Sciences Life Sciences Revenue (£m) Profit (£m) 30 10 Total: £26.2 Revenue increased by 9% Benefits of integration 25 on LFL* basis
Slide 20: Language Solutions
RWS 2018© HALF YEAR RESULTS Language Solutions Good growth showing benefits of FY 2017 reorganization. Language Solutions Language Solutions Revenue (£m) Profit (£m) Revenue increased by 11% Collaboration across 0.8 7 (CC*) Language Solutions offices generating: 6 Good profit improvement › Additiona
Slide 21: Market Update
Market Update
Slide 22: Our markets: update
RWS 2018© HALF YEAR RESULTS Our markets: update Unitary Patent › Now expected to be introduced in Q1 2019 at the earliest › German ratification delayed pending a court appeal that claims the UP is unconstitutional › UK ratified unitary patent in May. Uncertainty remains over UK’s membership of unita
Slide 23: Our Priorities
Our Priorities
Slide 24: Strategic priorities
RWS 2018© HALF YEAR RESULTS Strategic priorities #1 #2 #3 Moravia Cross-selling Machine translation › Assimilation with RWS › Sales training and joint events › Further leverage Moravia expertise › Cost reduction › Strengthen Group mentality › Identify suitable technology partners › Sharing of best p
Slide 25: Outlook and Current Trading
Outlook and Current Trading
Slide 26: Current trading and outlook
RWS 2018© HALF YEAR RESULTS Current trading and outlook › Trading since the period end is in line with expectations › FX headwinds are easing › Expect to grow revenues and profits in the second half with the benefit of: › the integration of our Life Science businesses › accelerating revenue performa
Slide 27: Strong track record
RWS 2018© HALF YEAR RESULTS Strong track record Annual revenue (£m) Annual adjusted PBT* (£m) 164.0 43.3 122.0 30.6 93.6 95.2 77.4 22.7 21.0 22.1 65.4 68.8 60.6 54.1 55.7 16.2 17.2 46.2 14.5 14.6 13.9 35.9 40.8 11.0 27.3 31.0 7.4 9.0 5.6 6.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201
Slide 28: Appendices
Appendices
Slide 29: Attractive growth markets
RWS 2018© HALF YEAR RESULTS Attractive growth markets PCT European Patent Life Sciences Language Services Filings Filings £1,060bn market $47.5bn market 243,500 310,784 by 2022 Grown by 6.9% pa 4.5% increase in 2017 4.4% increase in 2017 Source: Common Sense Advisory Source: WIPO Source: EPO 6.5% CA
Slide 30: Investment summary
RWS 2018© HALF YEAR RESULTS Investment summary › Strong track record of sales and underlying profit growth › Market leading positions across its specialist businesses: › No. 1 position in the worldwide patent translation and PCT filing market › Market leading position in life science translations an
Slide 31: A strong team to manage growth
RWS 2018© HALF YEAR RESULTS A strong team to manage growth Role Name Years of service Chairman Andrew Brode 22 Chief Executive Officer Richard Thompson 5 Chief Financial Officer Desmond Glass - Chief Operating Officer Joe Lugo 2 Managing Director, Patent Translation & Filing Charles Sitch 25 Managin
Slide 32: Shareholders list
RWS 2018© HALF YEAR RESULTS Shareholders list As at 23 May 2018 Shareholder Holding (%) Andrew S Brode 33.0 Liontrust Asset Management 10.3 Aberdeen Standard Investment 6.5 Octopus Investments 6.2 Canaccord Genuity 6.1 Investec 3.5 Old Mutual 2.6 31
Slide 33: Overview EP and UP coverage
RWS 2018© HALF YEAR RESULTS European Patent Convention (38 + 4 extension) San Marino Switzerland European Union Members (28) Liechtenstein Montenegro Spain Croatia Macedonia Unitary Patent Members (26) Serbia Greece Poland Moldova Unitary Patent Ratifiers Germany (16) Italy Greece UK Slovakia Austri
Slide 34: Thank you
Thank you RWS.com RWS 2018© HALF YEAR RESULTS