Slide 1: Full Year Results
Full Year Results December 2019 RWS 2019© YEAR END RESULTS Andrew Brode Richard Thompson Des Glass 1 Chairman Chief Executive Officer Chief Financial Officer
Slide 2: An excellent year
An excellent year 16th successive year of growth in Acquisition of Alpha Translations Opening of a new Moravia sales, profit, EPS and dividend Canada Inc., a specialized legal office in Brno will result in since flotation translation provider improved communication and efficiency Increased investmen
Slide 3: Strong cash-generative growth driving returns
Strong cash-generative growth driving returns Revenue Adjusted PBT2 Adjusted EPS2 £355.7m £74.2m 21.3p + 16% + 20% + 22% +7% underlying1 + 14% underlying1 2018: 17.4p 2018: £306.0m 2018: £61.8m Final dividend Cash Net debt 7.00p £47.0m £36.8m +17% after £50.4m in debt, 0.5x 2019 Adjusted PBT interes
Slide 4: A 16-year track record of unbroken growth
4 27.3 2003/2004 31.0 35.9 2005/2006 40.8 46.2 2007/2008 54.1 55.7 2009/2010 60.6 65.4 2011/2012 68.8 RWS 2019© YEAR END RESULTS 77.4 2013/2014 93.6 95.2 2015/2016 122.0 164.0 2017/2018 306.0 355.7 2019 Annual revenue (£m) 5.6 2003/2004 6.0 A 16-year track record of unbroken growth 7.4 2005/2006 9.0
Slide 5: Financial Review 2019
Financial Review 2019 RWS 2019© YEAR END RESULTS 5
Slide 6: Income statement
Income statement Year ended Year ended Strong revenue growth – up 16% 30 September 2019 30 September 2018 › Full period contribution from Moravia (£m) (£m) › Organic1 growth – 12% Revenue 355.7 306.0 › Underlying2 growth – 7% Cost of sales (213.2) (187.2) Gross margin strengthened 130bps led by Gros
Slide 7: Underlying segmental revenue bridge
Underlying segmental revenue bridge Underlying1 revenue growth £m 360 13.6 355.7 +10% IP Services 350 12.9 +10% Life Sciences 340 5.3 (1.6) 329.2 +7% Moravia 330 8.8 320 10.7 -11% Language Solutions 310 306.0 +7% Group 300 FY 2018 IP Services Moravia Life Sciences Language Underlying Acquisitions FX
Slide 8: Group currency analysis
Group currency analysis Analysis of key currencies – FY 2019 Currency management remains a priority (in GBP million equivalents) Significant and growing USD surplus being actively Revenue by currency managed › Substantial natural hedge through USD debt Operating costs by currency › Effectively hedge
Slide 9: Net debt bridge
Net debt bridge Cash Conversion £m 30 95% 84.4 (1.8) (8.0) 2018: 89% 20 10 Free cash flow 0 £58.3m (11.5) 2018: £35.0m -10 (4.5) -20 Net debt -30 (21.2) (4.1) £36.8m -40 (5.0) 2018: £65.1m (36.8) -50 -60 Effective tax rate -70 (65.1) 21.2% 2018: 23.8% Opening net FY2019 Working Capex Tax Acquisition
Slide 10: Balance sheet
Balance sheet As at As at Balance sheet 30 September 2019 30 September 2018 (£m) (£m) Intangibles Non-current assets 444.8 429.8 Increase in non-current assets due to Trade and other receivables 85.5 72.6 acquisition of Alpha Translations Canada Inc. Foreign exchange derivatives - 1.0 and exchange m
Slide 11: Capital allocation
Capital allocation Our capital allocation priorities are clear Cash flow Approach High cashflow Maximize cross-selling opportunities and conversion with Continued strong Existing cash generation 1 business continue to focus on organic growth minimal CAPEX across all three divisions Progressive divid
Slide 12: Adjusted profit before tax bridge
Adjusted profit before tax bridge £m 80 11.9 (0.6) (2.2) (0.3) 74.2 75 70 3.6 65 61.8 60 55 50 FY 2018 Effect of Trading Corporate costs MtM of forward Net exchange FY 2019 Adjusted PBT acquisitions performance contracts differences Adjusted PBT RWS 2019© YEAR END RESULTS 12
Slide 13: Operational Review 2019
Operational Review 2019 RWS 2019© YEAR END RESULTS 13
Slide 14: Leaders in specialist, growing market segments
Leaders in specialist, growing market segments IP Services Moravia Life Sciences World’s premier provider of patent Customized localization programs with Exclusive focus on pharmaceutical, translation and filing, search, retrieval Deelete innovative technology solutions biotech, medical device compa
Slide 15: Attractive growth markets
Attractive growth markets PCT Filings European Patent Life Sciences Language industry 253,000 Applications US$10 trillion US$49.6bn 3.9% increase in 174,317 market by 2022 market 2018 4.6% increase in 2018 Source: WIPO Source: EPO 5.4% annual growth rate 2018-2022 7.8% CAGR 2009-2019 Source: Deloitt
Slide 16: Increased diversification of services: profit
Increased diversification of services: profit Adjusted operating profit Patent Translation & Filing Life Sciences 11% Language Solutions 5% 25% Patent Information FY 2016 46% Moravia 19% FY 2018 5% 65% 2% 22% 13% 9% 3% 6% 31% 4% 44% FY 2015 27% FY 2017 FY 2019 61% 1% 77% 24% RWS 2019© YEAR END RESUL
Slide 17: IP Services
IP Services IP Services Revenue (£m) IP Services Adjusted Revenue grew by 10% (CC1) Future growth Operating Profit (£m) › Strong organic growth from › Strong order pipeline established client base 35 140 › Increased revenue from prior Asia 130 period client wins › Long-term revenue growth from 120 3
Slide 18: Life Sciences
Life Sciences Life Sciences Revenue (£m) Life Sciences Adjusted Operating Profit (£m) Revenue grew by 10% on underlying1 basis › Good growth from key clients (largest customer grew by 9% CC1) 70 22 › Increased sales in linguistic validations (+24% CC1) › Sales to former Moravia life science clients
Slide 19: Moravia
Moravia Moravia Revenue (£m) Moravia Adjusted Operating Profit (£m) 160 30.0 Revenue grew by 7% on underlying1 basis 140 25.0 120 › Significant growth outside the ‘top 5’ clients 20.0 › Tight control on overheads 100 › Good sales growth 80 15.0 › New centralized office opened in Brno resulting in be
Slide 20: Language Solutions
Language Solutions Language Solutions Language Solutions Revenue (£m) Adjusted Operating Profit (£m) 16 2 14 1.8 Adjusted operating profit Integration with Moravia 1.6 fell to £0.4m › Offer similar services albeit at 12 1.4 › Adverse trading conditions different scales 10 in core markets › Will bene
Slide 21: Environmental, Social and Governance
Environmental, Social andHalf Year Results Governance June 2019 RWS 2019© YEAR END RESULTS 21
Slide 22: Environmental, social and governance highlights
Environmental, social and governance highlights Environment Social and Community Corporate governance Compliant with Streamlined Energy Yes Employee health and wellbeing: proactively Compliance with the 10 key principles in Yes and Carbon Reporting (SECR) policy support the personal health and wellb
Slide 23: Strategic priorities
Strategic priorities RWS 2019© YEAR END RESULTS 23
Slide 24: Our strategic priorities remain
Our strategic priorities remain Drive Cross-sell and joint Harness technology Selective aquisitions 1 organic growth 2 sell 3 4 › Focus on quality of › Strengthen Group mentality › Further leverage RWS Moravia › Extend capabilities and access to services to clients › Sell our full service offering m
Slide 25: Current trading and outlook
Current trading and outlook RWS 2019© YEAR END RESULTS 25
Slide 26: Current trading summary and outlook
Current trading summary and outlook › Group is now a well-balanced and integrated › Strong platform to maximise opportunities business with extensive service offerings and across our full suite of services and a global presence, well positioned to convert technology capabilities for new and a wide r
Slide 27: Thank you
Thank you RWS.com RWS 2019© YEAR END RESULTS 27
Slide 28: Appendices
Appendices RWS 2019© YEAR END RESULTS 28
Slide 29: Shareholders list
Shareholders list As at 25 November 2019 Top seven shareholders Holding (%) Andrew S Brode 32.9 Liontrust Asset Management 11.0 Aberdeen Standard Investment 7.5 Octopus Investments 5.0 Canaccord Genuity 4.7 BlackRock 2.8 Investec 2.6 RWS 2019© YEAR END RESULTS 29
Slide 30: Challenges and opportunities
Challenges and opportunities Unitary Patent (UP) › Remains unclear when UP system will start as date is dependent on ratification of UP agreement by German authorities pending a legal appeal that claims it is unconstitutional. Expected case will be heard in Q1 2020 › Uncertainty remains over UK’s me
Slide 31: Environmental, social and governance highlights
Environmental, social and governance highlights Environment Compliant with Streamlined Energy and Carbon Reporting Yes (SECR) policy Energy: seeking to reduce our energy consumption and Scope 1 and Scope 2 emissions on a 2% comparable basis as defined by the Greenhouse Gas Protocol Waste: to reduce
Slide 32: Environmental, social and governance highlights
Environmental, social and governance highlights Community Actively promote foreign language Outward Bound Trust learning through school and university partnership programmes: RWS Scholarship Programme with The University of Manchester RWS 2019© YEAR END RESULTS 32
Slide 33: Environmental, social and governance highlights
Environmental, social and governance highlights Social Corporate governance . Data privacy and security is a top Employee health and wellbeing: priority Compliance with the 10 key proactively support the personal principles in the QCA Corporate Yes health and wellbeing Governance Code Equal opportun
Slide 34: Extended our geographical reach
Extended our geographical reach 6 542 72 16 29 56 305 72 428 552 34 2,523 402 FTE employees 10 RWS 2019© YEAR END RESULTS 34