Rws Holdings Plc · LSE:RWS
Rws — FY2020 Earnings Presentation
30 slides from Rws's earnings presentation, 2020
Slide 1: Full Year Results 2020
FULL YEAR RESULTS 2020 Andrew Brode Richard Thompson Des Glass 1 RWS 2020© FINAL RESULTS 2020 Chairman Chief Executive Officer Chief Financial Officer
Slide 2: Results as expected following a stronger H2
Results as expected following a stronger H2 REVENUE ADJUSTED PBT2 ADJUSTED EPS2 £355.8m £70.2m 19.9p + 0.02% - 5.5% - 6.6% - 0.9% underlying1 - 2.7% underlying1 2019: £355.7m 2019: £74.2m 2019: 21.3p PROPOSED FINAL DIVIDEND CASH NET DEBT3 7.25p £51.4m £15.1m + 3.6% after £63.9m in debt, - 59.0% inte
Slide 3: Leaders in specialist, growing market segments
Leaders in specialist, growing market segments IP Services Life Moravia SDL Sciences World’s premier provider Exclusive focus on Customized localization £0.6bn acquisition of patent translation and language service needs of programs with innovative completed on 4 November filing, search, retrieval a
Slide 4: Financial Review 2020
Financial Review 2020 4 RWS 2020© FINAL RESULTS 2020
Slide 5: Income statement
Income statement Year ended Year ended 30 September 2020 30 September 2019 (£m) (£m) Revenue 355.8 355.7 Reported revenues in line YoY : Cost of sales (216.2) (213.2) › Organic and underlying1 reduction – 1% Gross profit 139.6 142.5 GM% 39.2% 40.1% Gross margin 90bps lower at 39.2% › Shift in divisi
Slide 6: Underlying segmental revenue bridge
Underlying segmental revenue bridge UNDERLYING1 REVENUE GROWTH £m 370 -10.1% IP Services 360 355.7 3.8 0.0 355.8 3.6 352.0 350 5.3 +5.5% Life Sciences 340 (12.6) 330 +3.2% Moravia 320 310 -1.0% Group 300 2019 reported IP Services Moravia Life Sciences Underlying Acquisitions FX 2020 reported revenue
Slide 7: Balance sheet
Balance sheet As at As at Balance sheet 30 September 2020 30 September 2019 (£m) (£m) Non-current assets 456.5 444.8 Non-current assets Trade and other receivables 82.1 85.5 › Acquisitions of Webdunia and Iconic Foreign exchange derivatives 0.6 - › Right-of-Use asset of £23.7m recognised on Cash and
Slide 8: Net debt bridge
Net debt1 bridge £m 70 7.1 27.9 50 30 60.2 (23.0) (8.1) 10 (15.2) -10 1.9 2.3 (24.1) (3.2) (15.1) (4.1) -30 (36.8) -50 Opening FY2020 Non-cash Working Acquisitions Capex Tax Dividends Interest Share Lease Other Closing 1 1 Net Debt Operating items capital issues payments Net Debt Profit 1 Net debt c
Slide 9: Capital allocation
Capital allocation Our capital allocation priorities remain clear and unchanged CASH FLOW APPROACH Maximize cross-selling opportunities and High cash conversion and low Continued strong Existing continue to focus on organic growth capex cash generation 1 business across all three divisions Free ca
Slide 10: Operational Review 2020
Operational Review 2020 10 RWS 2020© FINAL RESULTS 2020
Slide 11: IP Services
IP Services REVENUE DOWN BY 10% ON UNDERLYING1 BASIS IP Services Revenue (£m) IP Services Adjusted › Against strong comparatives due to prior year EPO boost Operating Profit (£m) › Covid-19 impact in H2; certain clients requested less translations 130 and reduced costs by filing in fewer territories
Slide 12: Life Sciences
Life Sciences REVENUE GREW BY 6% ON UNDERLYING1 BASIS Life Sciences Revenue (£m) Life Sciences Adjusted Operating Profit (£m) › Good growth from key clients › Good new client wins in the period 70 25 › Increased sales in linguistic validations (+8% CC1) 60 › Started seeing benefits from EU Medical D
Slide 13: Moravia
Moravia REVENUE GREW BY 3% ON UNDERLYING1 BASIS Moravia Revenue (£m) Moravia Adjusted Operating Profit (£m) › Growth driven by strong sales to several major technology clients, including increased social media activity during Covid- 180 30 19 160 › Growth outside the ‘top six’ clients was stronger (
Slide 14: SDL acquisition
SDL acquisition 14 RWS 2020© FINAL RESULTS 2020
Slide 15: SDL acquisition creates the world's leading language services and technology group
SDL acquisition creates the world’s leading language services and technology group › Combines RWS’ specialist technical language services and The capabilities, scale and reach to serve the largest SDL’s language technology expertise, enhancing the global companies customer proposition › 90 of the wo
Slide 16: Disciplined approach to integration
Disciplined approach to integration December 2020 – February 2021 November 2020 March 2021 - Detailed integration plan Designed the structure Execution - to ensure seamless delivery and - to optimize our expanded scale, - to deliver four efficient divisions that focus on key growth areas of value to
Slide 17: Good progress in the first five weeks
Good progress in the first five weeks › New divisional structure and senior leadership team announced › Four new divisions to maximise synergies: › RWS IP Services › RWS Life Sciences and SDL Regulated Industries › RWS Moravia and SDL Commercial Enterprise › SDL Language Technology and SDL Content T
Slide 18: What success looks like
What success looks like › A clear market leader in language solutions and language technology, with unique breadth of product and service offerings › Integration of streamlined technology into RWS services provides compelling proposition for customers › Customer satisfaction levels maintained or imp
Slide 19: Environmental, Social and Governance
Market Dynamics Environmental, Social and Governance 19 RWS 2020© FINAL RESULTS 2020
Slide 20: Environmental, social and governance highlights
Environmental, social and governance highlights RWS has joined the United Nations Global Compact Initiative, underscoring its commitment to taking responsible business action to protect the planet, do business fairly, and foster a safe and inclusive workplace. ENVIRONMENT SOCIAL AND COMMUNITY GOVERN
Slide 21: Current trading and outlook
Current trading and outlook Current trading and Outlook 21 RWS 2020© FINAL RESULTS 2020
Slide 22: Challenges and opportunities
Challenges and opportunities › COVID- 19 › RWS has experienced mixed demand impacts from Covid-19, with a negative impact on IP Services › The specialist niches that RWS operates in, and a cash generative business model, puts the Group in a good position › BREXIT › Established strong lines of commun
Slide 23: Current Trading & Outlook
Current Trading & Outlook › Following the acquisition of SDL, RWS is now › The new financial year has begun positively, the world’s leading provider of language slightly ahead of our expectations services and language technology › SDL integration process has started well › Enlarged Group will operat
Slide 24: Thank you and questions
Thank you and questions RWS.com 24 RWS 2020© FINAL RESULTS 2020
Slide 25: Appendices
Market Dynamics Appendices 25 RWS 2020© FINAL RESULTS 2020
Slide 26: Key investment case highlights
Key investment case highlights Strong market positions in structurally growing end markets Experienced management team Attractive and sustainable margins Market leading language and Successful track record of value- content technology products enhancing M&A Strong balance sheet ensuring Strong cash
Slide 27: Acquisitions – Iconic Translation Machines and Webdunia
Acquisitions – Iconic Translation Machines and Webdunia ICONIC TRANSLATION MACHINES › Highly successful award winning niche machine translation (MT) provider based in Dublin › Initial cash consideration of USD$10m, potentially rising by another $10m, payable in shares in RWS, providing certain reven
Slide 28: A 17-year track record growth
A 17-year track record growth 28 RWS 2020© FINAL RESULTS 2020
Slide 29: Shareholders list
Shareholders list As at 27 November 2020 Top shareholders Holding (%) Andrew S Brode 23.2 Liontrust Asset Management 8.0 Aberdeen Standard Investments 5.1 Canaccord Genuity Wealth Management 4.2 Octopus Investments 3.5 BlackRock 3.0 Schroder Investment Management 2.7 29 RWS 2020© FINAL RESULTS 2020
Slide 30: RWS + SDL: a global network to support global clients
RWS + SDL: a global network to support global clients RWS 2,072 SDL Europe 557 466 North UK 402 America 831 North Europe America 563 UK FY20 991 Asia Pacific 405 1,236 3,095 South Asia America Pacific 99 South Full time employees America 4,527 Full time employees 30 RWS 2020© FINAL RESULTS 2020