Rws Holdings Plc · LSE:RWS
Rws — Merger or Acquisition (August 2020)
30 slides from Rws's merger presentation, Aug 27, 2020
Slide 1: Creating the world's leading language services and technology group
Creating the world’s leading language services and technology group Recommended all-share combination of RWS Holdings plc and SDL plc 27 August 2020 ©RWS 2020 Creating the world’s leading language services and technology group
Slide 2: Andrew Brode, Chairman of RWS
Andrew Brode Chairman of RWS ©RWS 2020 Creating the world’s leading language services and technology group
Slide 3: Creating the world's leading language services and technology group
Creating the world’s leading language services and technology group 1.2246 New RWS Shares for every SDL Share1 70.5% : 29.5% RWS : SDL Combined Group’s equity split 907p Offer price1 c.£854 million Offer equity value1 52% Premium1 Source: Company filings and publicly available information Notes: ©RW
Slide 4: Compelling reasons for combining RWS and SDL
Compelling reasons for combining RWS and SDL 1. Combines RWS’ specialist technical language services and SDL’s language technology expertise 2. Enhances the customer proposition and, over time, is expected to generate margin improvements and revenue synergy opportunities 3. Substantially strengthens
Slide 5: Size and scale: the world's leading language services and technology group
Size and scale: the world’s leading language services and technology group FY2019 (£’m) RWS1 SDL2 RWS + SDL3 Revenue 356 376 732 Adj. PBT4 74 35 109 Net cash inflow from 70 41 111 operating activities5 Headcount (#) 2,523 4,300+ 6,823+ Source: Company filings and publicly available information Notes
Slide 6: Management and Governance
Management and Governance Board of the Combined Group Key Executive › Andrew Brode Leadership Executive Chairman RWS › Richard Thompson › Desmond Glass › David Shrimpton1 › Joe Lugo CEO CFO SID COO RWS RWS RWS RWS › Lara Boro2 › David Clayton › To be confirmed › Azad Ootam NED NED NED CTO RWS SDL SD
Slide 7: The RWS Board expects the Combined Group will maintain RWS' progressive dividend policy
The RWS Board expects that the Combined Group will maintain RWS’ progressive dividend policy › RWS dividend per share (p) (1) › Recent dividend per share (p) and payout ratio (%) FY17 FY18 FY19 8.8 6.5 7.5 8.8 7.5 RWS 45% 43% 41% 6.5 5.6 6.2 7.0 0.0(2) 4.9 4.6 SDL 4.1 31% 28% 0% 3.5 3.1 2.7 2.3 2.1
Slide 8: Richard Thompson, Chief Executive Officer of RWS
Richard Thompson Chief Executive Officer of RWS ©RWS 2020 Creating the world’s leading language services and technology group
Slide 9: 1. Combines RWS' specialist technical language services and SDL's language technology expertise
1. Combines RWS’ specialist technical language services and SDL’s language technology expertise › The Combined Group will have broad capabilities across language services, language and content software and IP services › Combines the strengths of RWS’ specialist technical translation and localisation
Slide 10: 2. Enhances the customer proposition and margin improvements
2. Enhances the customer proposition and, over time, is expected to generate margin improvements and revenue synergy opportunities › Greater scale and capabilities: an enhanced product and service › FY2019 Revenue by client location proposition for both companies’ customers around the world £341m £3
Slide 11: 2. An expanded global network to support global clients
2. An expanded global network to support global clients RWS › Expanded geographical footprint across the US, UK, SDL Continental Europe, Asia, Canada and South America 2,570 Europe 444 1,290 North America Europe 305 China FY2019 640 72 Japan North and South America 1,090 ASIA 2,523 Full time employe
Slide 12: 3. Strengthens language services positions in life sciences and technology sectors
3. Substantially strengthens the Combined Group’s language services positions in the life sciences and technology sectors › Brings together RWS’ life sciences division with SDL’s equivalent life sciences focused operations › Creating a significant customer proposition in the $1.9 billion1 high growt
Slide 13: 4. Generates substantial value from at least £15 million of cost synergies
4. Generates substantial value from at least £15 million of cost synergies › Significant run-rate annual cost synergies of at least £15 million by the end of the financial year ended 30 September 2022, the first full year post Completion › Rationalisation and consolidation Corporate & › Duplicate pu
Slide 14: 5. Combined Group with attractive margins
5. Combined Group with attractive margins… › Combined Group FY2019 pro forma › FY2019 Revenue and Adj. Operating Profit1 revenues of £732 million and FY2019 £732m adjusted operating profit of £116 million, implying an attractive margin profile of over £376m 15 per cent. before synergies 15%+ › Oppor
Slide 15: 5. …and a strong balance sheet with expected net cash on Completion
5. …and a strong balance sheet with expected net cash1 on Completion, providing a platform from which to invest in organic and inorganic growth opportunities › Strong combined balance sheet at › Track record of M&A completion RWS SDL › Expected net cash position1 and 2020 - significant financing ava
Slide 16: David Clayton, Chairman of SDL
David Clayton Chairman of SDL ©RWS 2020 Creating the world’s leading language services and technology group
Slide 17: Rationale for SDL Board's recommendation
Rationale for SDL Board’s recommendation Clear and compelling strategic and financial benefits in a combination of SDL and RWS: ➢ Increased volume to leverage the machine translation and artificial intelligence capabilities of SDL ➢ Increased scale and reach across a number of markets ➢ Highly attra
Slide 18: Expected offer timetable
Expected offer timetable › Implemented via a court-sanctioned scheme of arrangement Expected offer timetable › Effective Date expected in Q4 2020 › Subject to: 27 August Publication of offer announcement › RWS Shareholder approval to issue new RWS shares1 Within 28 days of Posting of Circular and Sc
Slide 19: Andrew Brode, Chairman of RWS
Andrew Brode Chairman of RWS ©RWS 2020 Creating the world’s leading language services and technology group
Slide 20: Summary rationale for the Combination
Summary rationale for the Combination 1. Combines RWS’ specialist technical language services and SDL’s language technology expertise 2. Enhances the customer proposition and, over time, is expected to generate margin improvements and revenue synergy opportunities 3. Substantially strengthens the Co
Slide 21: Q&A
Creating the world’s leading language services and technology group Q&A ©RWS 2020 21 Creating the world’s leading language services and technology group
Slide 22: Appendix
Appendix ©RWS 2020 22 Creating the world’s leading language services and technology group
Slide 23: Summary of the recommended all-share Combination
Summary of the recommended all-share Combination The Combined › Will be called RWS Holdings plc and headquartered in Chalfont St Peter Group › Listed on AIM › 1.2246 new RWS Shares in exchange for each SDL Share Split of the Combined Group’s equity › Based on the closing share prices as at 26 August
Slide 24: Current trading
Current trading RWS SDL As previously announced in its Half Year Results1: As previously announced in its Half Year Results2: › Limited impact from COVID-19 on customer › Customer activity increasingly stabilised in May demand and June, with some signs of more positive momentum beginning to build ›
Slide 25: RWS overview
RWS overview › One of the world's largest providers of intellectual property support services (patent translations, international patent filing solutions and searches) › Significant provider of life sciences translations and linguistic validation › A highly experienced localisation provider, and a h
Slide 26: RWS has a 16 year track record of unbroken revenue and profit growth since IPO
RWS has a 16 year track record of unbroken revenue and profit growth since IPO › Annual revenue (£m) › Annual adjusted PBT (£m)1 › RWS adjusted earnings per share and share price (p) (2,3) 74.2 355.7 306.0 61.8 21.3 43.3 17.4 164.0 30.6 14.3 122.0 22.7 22.1 21.0 10.9 7.7 95.2 93.6 17.2 16.2 6.2 77.4
Slide 27: SDL overview
SDL overview › Top 3 language service provider by revenue, highly experienced in language technologies and web and structured content management, and has been operating for over 25 years › Has built competitive differentiation by innovation in language services, providing advanced technology and art
Slide 28: Creating the world's leading language services and technology group
©RWS 2020 28 Creating the world’s leading language services and technology group
Slide 29: Important Notice
Important Notice This presentation (including any printed or electronic copies, accompanying oral presentation, question and answer session and any other document or materials distributed at or in connection with this presentation) and the information contained within it (this “presentation”) is str
Slide 30: Important Notice (cont'd)
Important Notice (cont’d) This presentation contains certain information which RWS’ and SDL’s management believe is required to understand the rationale for the Combination. However, not all of the information in this presentation has been audited and the presentation contains certain “forward-looki