Rws Holdings Plc · LSE:RWS
Rws — H1 2019 Earnings Presentation
29 slides from Rws's earnings presentation, June 2019
Slide 1: Half Year Results
Half Year Results June 2019 Andrew Brode Richard Thompson Desmond Glass Chairman Chief Executive Officer Chief Financial Officer
Slide 2: An excellent first half
RWS 2019© HALF YEAR RESULTS An excellent first half Double-digit underlying revenue and profit growth Record revenues of Strong sales performance Growing demand for IP £172.3m (H1 2018: from RWS IP Services, and language services in £139.6m), an increase of including 23% growth in China and Japan fr
Slide 3: Strong, cash-generative growth driving returns
RWS 2019© HALF YEAR RESULTS Strong, cash-generative growth driving returns Sales Adjusted PBT 2 Cash £172.3m £35.6m £27.4m + 23% + 24% after £35.4m in debt, +10% underlying1 + 18% underlying1 acquisition and dividend payments H1 2018: £139.6m H1 2018: £28.6m H1 2018: £24.3m Adjusted EPS 2 Net debt I
Slide 4: A 15-year track record of unbroken growth
A 15-year track record of unbroken growth RWS 2019© HALF YEAR RESULTS 350 Annual revenue (£m) 70 Annual adjusted PBT 1 (£m) 300 60 250 50 200 40 150 30 100 20 50 10 0 0 20.00 Adjusted diluted EPS 2 (pence) 8.00 Dividend 2 per share (pence) 7.00 15.00 6.00 5.00 10.00 4.00 3.00 5.00 2.00 1.00 0.00 0.0
Slide 5: Financial Review H1 2019
Financial Review H1 2019
Slide 6: Income statement
RWS 2019© HALF YEAR RESULTS Income statement 6 months ended 6 months ended 31 March 2019 31 March 2018 Strong revenue growth – up 23% (£m) (£m) › Organic1 growth – 14% › Underlying2 growth – 10% Revenue 172.3 139.6 › Full period contribution from RWS Moravia Cost of sales (103.6) (84.7) Gross profit
Slide 7: Underlying segmental revenue analysis
RWS 2019© HALF YEAR RESULTS Underlying segmental revenue analysis H1 2019 H1 2018 YoY YoY Currency Acquisition Internal Underlying1 reported reported growth growth impact impact transfers3 YoY Growth (£m) (£m) (£m) (%) (£m) (£m) (£m) (£m) Underlying1 revenue growth IP Services IP Services 62.3 54.3
Slide 8: Segmental operating margin analysis
RWS 2019© HALF YEAR RESULTS Segmental operating margin analysis Language IP Services Moravia Life Sciences Solutions 24% H1 H1 H1 H1 H1 H1 H1 H1 2019 2018 2019 20181 2019 2018 2019 2018 Adjusted 42% operating profit Revenue 62.3 54.3 71.1 52.1 31.8 26.2 7.1 7.0 by segment Adjusted operating profit -
Slide 9: Group currency analysis
RWS 2019© HALF YEAR RESULTS Group currency analysis › Continued focus on reducing earnings volatility Key currency exposures – H1 2019 › Novation of significant portion of USD debt to RWS (in millions of GBP equivalents) Moravia in late FY18 and now applying hedge accounting 140 Revenue by currency
Slide 10: Adjusted profit before tax bridge
RWS 2019© HALF YEAR RESULTS Adjusted profit before tax bridge 45 40 6.4 (0.7) (0.5) 0.1 (1.7) 35.6 35 3.4 30 28.6 25 20 15 10 5 0 H1 2018 Effect of acquisitions 1 Trading performance Corporate costs Interest on additional MtM of forward Net exchange H1 2019 debt contracts differences 10 1 Includes a
Slide 11: Balance sheet and cash flow
RWS 2019© HALF YEAR RESULTS Balance sheet and cash flow As at As at 6 months ended 6 months ended 31 March 2019 30 September 2018 31 March 2019 31 March 2018 (£m) (£m) (£m) (£m) Non-current assets 425.6 429.8 Profit before tax 27.6 18.3 Trade and other receivables 79.5 72.6 Add/(Less): Foreign excha
Slide 12: Operational Review H1 2019
Operational Review H1 2019
Slide 13: Leaders in specialist, growing market segments
RWS 2019© HALF YEAR RESULTS Leaders in specialist, growing market segments Life Sciences Moravia IP Services › Technical translations and › Technology-enabled linguistic validation for localization for companies › World’s premier provider of pharmaceutical, biotech, requiring global reach and patent
Slide 14: Increased diversification of services: profit
RWS 2019© HALF YEAR RESULTS Increased diversification of services: profit 3% 5% 11% 9% 28% 25% 31% 44% Adjusted Proforma Adjusted Adjusted 46% adjusted 44% 19% operating profit 27% operating profit operating profit for FY 2017 operating profit for FY 2016 5% for FY 2018 61% for FY 2019 65% 2% 1% 21%
Slide 15: RWS IP Services
RWS 2019© HALF YEAR RESULTS RWS IP Services IP Services revenue (£m) IP Services adjusted PBT (£m) 70 20 Revenue grew by 13% on underlying1 basis 60 › Good growth from core client base and revenue from new wins in prior periods 15 › Good pipeline of sales opportunities 50 › Continuing growth in PatB
Slide 16: RWS Life Sciences
RWS 2019© HALF YEAR RESULTS RWS Life Sciences Life Sciences revenue (£m) Life Sciences adjusted PBT (£m) 14 Revenue grew by 6% on underlying1 basis 40 › Strong first half with good growth from key clients and strong performance from 12 linguistic validation business (+26%) where we continue to inves
Slide 17: RWS Moravia
RWS 2019© HALF YEAR RESULTS RWS Moravia Moravia revenue (£m) Moravia adjusted PBT (£m) Strong H1 performance with margins up to 19.0% from 9.3% 80 14 › Growth from top clients 70 › Several new business wins as we continue to diversify client base 12 › Continued focus on cost control 60 10 50 8 › Lev
Slide 18: Market Dynamics
Market Dynamics
Slide 19: Attractive growth markets
RWS 2019© HALF YEAR RESULTS Attractive growth markets PCT European Patent Life Sciences Localization Filings Applications US$1,060bn market US$49.6bn market 253,000 174,317 by 2022 7.8% CAGR 2009-2019 3.9% increase in 2018 4.6% increase in 2018 Source: Common Sense Advisory Source: WIPO Source: EPO
Slide 20: Challenges and opportunities
RWS 2019© HALF YEAR RESULTS Challenges and opportunities Unitary Patent › Now expected to be introduced in Q2 2020 at the earliest › German ratification delayed pending a court appeal that claims the UP is unconstitutional › Uncertainty remains over UK’s membership of unitary patent post Brexit › Ta
Slide 21: Strategic Priorities
Strategic Priorities
Slide 22: Our strategic priorities remain
RWS 2019© HALF YEAR RESULTS Our strategic priorities remain #1 #2 #3 #4 Drive organic growth Cross-sell Harness technology Selective acquisitions › Increase sales › Strengthen Group mentality › Further leverage RWS Moravia › Extend capabilities › Additional services › Sell our full service offering
Slide 23: Current Trading and Outlook
Current Trading and Outlook
Slide 24: Current trading and outlook
RWS 2019© HALF YEAR RESULTS Current trading and outlook › Trading performance since period end has been in line with recently upgraded market expectations › Confident in delivering another record year: › growth opportunities in America and Asia Pacific › continued focus on developing sales teams acr
Slide 25: Thank you
Thank you RWS.com RWS 2019© HALF YEAR RESULTS
Slide 26: Appendices
Appendices
Slide 27: Investment summary
RWS 2019© 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 patent filing market, with a leading patent search service with the PatBase
Slide 28: Shareholders list
RWS 2019© HALF YEAR RESULTS Shareholders list As at 30 May 2019 Top seven shareholders Holding (%) Andrew S Brode 33.0 Liontrust Asset Management 11.4 Aberdeen Standard Investment 7.7 Octopus Investments 5.6 Canaccord Genuity 5.3 BlackRock 3.0 Investec 2.8 28
Slide 29: Our geographical reach
RWS 2019© HALF YEAR RESULTS Our geographical reach 8 >500 67 >500 >300 2 56 64 >550 11 ~2,500 FTE employees 10 >400 29