Rws Holdings Plc · LSE:RWS
Rws — FY2021 Earnings Presentation
34 slides from Rws's earnings presentation, Dec 14, 2021
Slide 1: Full Year Results 2021
Full Year Results 2021 December 2021 Andrew Brode Ian El-Mokadem Des Glass Chairman Chief Executive Officer Chief Financial Officer 1 © 2021 RWS
Slide 2: Initial observations
Initial observations Clients People Technology • Very impressive • Unified and • Highly technology- customer base experienced Executive enabled • Trusted by industry Team • Supports improved leaders to support their • Many talented and client solutions and our global strategies and energised people
Slide 3: A world leading provider of technology-enabled language, content and IP services
A world leading provider of technology-enabled language, content and IP services 16 of 90 of the Fortune’s 20 of the Major top 20 top 20 global top 100 most pharma technology brands admired companies businesses companies 10 out of 18 out of 19 of the 19 of the top 20 the the top top 20 medical top 1
Slide 4: Global capability, scale and reach; enhanced proposition and technology suite
Global capability, scale and reach; enhanced proposition and technology suite Language & Content IP Services Technology 753 North 15% 16% America 2,782 Europe 1,040 UK 2,622 Asia Pacific 477 23% South America 46% 7,674 Language Regulated FTE Services Industries FY21 Revenue Strong financial profile
Slide 5: A strong performance with profit ahead of expectations
A strong performance with profit ahead of expectations REVENUE ADJUSTED PBT2 GROSS MARGIN £694.5m £116.4m 45.1% + 95% + 66% + 590 bps + 4% organic constant currency1 + 25% organic constant currency1 + 10 bps organic constant currency1 FY20: £355.8m FY20: £70.2m FY20: 39.2% ADJUSTED BASIC EPS3 PROPOS
Slide 6: Financial Review
Financial Review 2021 6 © 2021 RWS
Slide 7: Income statement
Income statement Year ended Year ended 30 September 2021 30 September 2020 (£m) (£m) Revenue 694.5 355.8 • Revenue up significantly following the acquisition of SDL: Cost of sales (381.3) (216.2) • Organic constant currency2 +4% Gross profit 313.2 139.6 • Gross margin 590bps higher at 45.1% driven b
Slide 8: Organic constant currency revenue bridge
Organic constant currency revenue bridge £m 800 ORGANIC CONSTANT CURRENCY1 REVENUE GROWTH 2.6 0.5 729.7 750 348.1 10.9 11.8 694.5 700 +4% Language Services (35.2) 650 600 +8% Regulated Industries 550 500 +2% IP Services 450 400 Language & Content 355.8 +1% Technology 350 300 2020 Acquisitions 2 Lang
Slide 9: Balance sheet
Balance sheet As at As at 30 September 2021 30 September 2020 (£m) (£m) Non-current assets 1,059.4 458.4 SDL impact Trade and other receivables 191.8 82.1 • Increases in goodwill and intangible assets of £568.8m Other current assets 3.5 0.6 following the acquisition of SDL Cash and cash equivalents
Slide 10: Net debt/cash bridge
Net debt/cash1 bridge 160 53.5 140 120 70.5 (23.2) 100 (17.1) 80 (23.5) 60 (36.0) 0.6 0.2 45.3 55.0 40 (12.6) (0.6) (6.4) 20 0 -20 (15.1) -40 Opening 2021 Non-cash Working Acquistions Capex Tax Dividends Lease Interest Settlement Proceeds Other Closing net debt1 Operating items capital net of cash p
Slide 11: Capital allocation
Capital allocation Our capital allocation priorities remain clear and unchanged CASH FLOW APPROACH Continued Continue to focus on organic growth across Existing High cash conversion strong cash all four divisions and maximising cross- generation 1 business selling opportunities • Adjusted cash conve
Slide 12: Operational Review 2021
Operational Review 2021 DANNY FORERO / COLOMBIA 12 © 2021 RWS
Slide 13: RWS structure
RWS structure RWS SDL Bolt on acquisitions RWS today IP Services + Horn & Uchida = IP Services Moravia + Commercial Enterprises + Webdunia = Language Services Life Sciences + Regulated Industries = Regulated Industries Language Technology + Iconic = Language & Content Technology + Content Technology
Slide 14: Market leaders in focused segments, complemented by suite of technology products
Market leaders in focused segments, complemented by suite of technology products Language Services Regulated Industries IP Services • Helps world‘s leading brands • Life Sciences, Financial Services • World’s premier provider of manage their localisation needs and Legal verticals patent translation
Slide 15: Language Services
Language Services Operating margin improved, with growth from major technology and commercial customers Revenue1 (£m) Adjusted Operating Performance 350 70 Profit2 (£m) 4% • 4% organic growth at constant currency, with 60 strong sales to global technology clients 300 • Organic adjusted operating mar
Slide 16: Regulated Industries
Regulated Industries Strong performance, led by higher value Linguistic Validation Performance Revenue1 (£m) Adjusted Operating Profit2 (£m) 180 • 8% organic growth at constant currency, driven 8% 50 by life sciences vertical 160 45 • 110 bps organic adjusted operating margin 140 40 improvement thro
Slide 17: IP Services
IP Services Improved operating margins on increased H2 2021 revenues Revenue1 (£m) Adjusted Operating Performance 120 2% Profit2 (£m) • 2% organic growth at constant currency, driven 110 50 by IP search services & PatBase sales 100 45 90 • Organic adjusted operating margin 80 40 improvement of 90 bp
Slide 18: Language and Content Technology
Language and Content Technology Operating margin improved, as revenue reflects transition Performance Revenue1 (£m) Adjusted Operating Profit2 (£m) 120 • 1% organic growth in constant currency, partly 1% 40 offset by change in mix of software licenses 100 35 • Organic adjusted operating margin impro
Slide 19: Environmental, Social and Governance
Environmental, Social and Governance LEENA SHARMA | INDIA 19 © 2021 RWS
Slide 20: ESG – increased focus
ESG – increased focus Sustainability Social • Submitted our first Communication on Progress • Completed our first group-wide employee report to the United Nations Global Compact (June engagement survey 2021) • Relaunched our Well-being Employee Resource • Increased engagement on materiality Group -
Slide 21: ESG - next steps
ESG - next steps Corporate Our Our Our Our Sustainability Environment People Communities Governance • Continue to improve • Develop a carbon • Develop a group-wide • Align objectives of the • Develop a group-wide alignment of Group’s emission reduction plan labour and human newly formed RWS Code of
Slide 22: Current trading & Outlook
Current trading & Outlook 22 © 2021 RWS
Slide 23: Capitalise on expanded scale, footprint and capabilities
Capitalise on expanded scale, footprint and capabilities 1 Drive organic growth 2 Enhance efficiency and 3 Selective acquisitions margins • Increase share of wallet • Improved technology • Strengthen market with existing customers utilization in production position via targeted • Continued focus on
Slide 24: Summary and Outlook
Summary and Outlook • Current trading is in line with our full year expectations which anticipate: • Continued organic revenue growth at constant currency • Significant further margin expansion anticipated, as we realise full year synergies and continue to enhance efficiencies • Strong cash generati
Slide 25: Thank you and questions?
Thank you and questions? 25 © 2021 RWS
Slide 26: Appendices
Appendices 26 © 2021 RWS
Slide 27: Key investment case highlights
Key investment case highlights Strong market positions in structurally growing end markets Experienced Attractive and management team sustainable margins Successful track record Market leading and scalable of value-enhancing M&A language and content technology products Strong balance sheet Strong ca
Slide 28: An 18-year track record growth
An 18-year track record growth 28 © 2021 RWS
Slide 29: Shareholders
Shareholders As of 30 November 2021 Top shareholders Holding (%) Andrew S Brode 23.2 Liontrust Asset Management 8.4 Canaccord Genuity Wealth Management 5.6 Octopus Investments 3.9 RGM Capital 2.8 Janus Henderson Investors 2.5 Financiere de l’Echiquier 2.1 29 © 2021 RWS
Slide 30: Language Technologies – translation management overview
Language Technologies – translation management overview Translation Collaboration Linguist Management Trados Trados Live Trados Trados Studio Enterprise Team Essentials Language Cloud – secure, scalable cloud-based platform on which Trados product suite built WorldServer Groupshare MultiTrans 30 30
Slide 31: Language Technologies – translation management systems
Language Technologies – translation management systems Description What does it do? Key client benefits Key markets / clients • Manage translations for all content types, across all repositories, using any translation method • Supports multiple End-to-end translation • Built-in terminology managemen
Slide 32: Language Technologies – translation productivity
Language Technologies – translation productivity Key markets / Description What does it do? Key client benefits clients • Improve quality Trados Studio • Solution for management of translation • Reduce cost / time (desktop) processes for individual linguists • Consistency across all • Freelancers Co
Slide 33: Linguistic AI
Linguistic AI Also deployed as enabler for broader service solution for certain client groups Description What does it do? Key client benefits Key markets / clients • Secure internal communications Secure, adaptable neural • Instantly translates content at • Secure real-time • Enterprise Language We
Slide 34: Content Technologies – content lifecycle management
Content Technologies – content lifecycle management Description What does it do? Key client benefits Key markets / clients • Repurpose high-value multilingual content • BFSI • Reduces risk (financial, legal, and health in well-governed, collaborative environment • Healthcare & safety) Tridion Compon