Rws Holdings Plc · LSE:RWS
Rws — H1 2022 Earnings Presentation
33 slides from Rws's earnings presentation, Jun 9, 2022
Slide 1: RWS Half Year Results 2022
RWS Half Year Results 2022 9 June 2022 1 © 2022 RWS
Slide 2: Presenters: Andrew Brode, Ian El-Mokadem, Rod Day
Andrew Brode Ian El-Mokadem Rod Day Chairman Chief Executive Interim Chief Officer Financial Officer 2 © 2022 RWS
Slide 3: Agenda
Agenda Overview Financial Review Strategic and Operational Review Current Trading and Outlook Appendix 3 © 2022 RWS
Slide 4: Unique, world-leading provider of technology-enabled language, content and IP services
Unique, world-leading provider of technology-enabled language, content and IP services Revenue¹ Adjusted PBT¹ Expertise Reach 2003 £27m 2003 £6m 2003 2003 2005 £36m 2005 £7m 2007 £46m 2007 £11m 2009 £56m 2009 £15m 400 2011 £65m 2011 £16m 2013 £77m 2013 £21m 2022 2022 2015 £95m 2015 £23m 2017 £164m 2
Slide 5: High quality, long-term client relationships
High quality, long-term client relationships Supporting our ability to grow organically on a sustainable basis 16 of 90 of the Fortune’s 20 of the • Diversified client base: top 100 top 20 top 20 most pharma brands • Top 10 = 30% Group revenues admired companies companies • Top 30 = 41% Group revenu
Slide 6: A robust performance with H1 profit ahead of our expectations
A robust performance with H1 profit ahead of our expectations REVENUE ADJUSTED PBT1 GROSS MARGIN CAPEX £357.3m £60.7m 45.9% 4% of revenue + 9% + 20% + 100 bps + 100 bps HY21: £326.4m HY21: £50.5m HY21: 44.9% HY21: 3% ADJUSTED BASIC EPS2 INTERIM DIVIDEND CASH CONVERSION³ ROCE⁴ 11.9p 2.25p 120% 11.1%
Slide 7: RWS Growth Model
RWS Growth Model • New wins in Major Accounts and GoGlobal, including several EV manufacturers Building long-term client • eLearning sales to new logos, and as upsell to established clients relationships • Further penetration of Linguistic Validation segment in RI • Investment in go-to-market and sa
Slide 8: Agenda
Agenda Overview Financial Review Strategic and Operational Review Current Trading and Outlook Appendix 8 © 2022 RWS
Slide 9: Income statement
Income statement • Revenue up 9% following the acquisition of SDL in 6 months ended 6 months ended¹ November 2020: 31 March 2022 31 March 2021 (£m) • Organic constant currency2 +1% (£m) Revenue 357.3 326.4 • Gross margin 100bps higher at 45.9%: Cost of sales (193.3) (179.9) • Greater use of LXD Gros
Slide 10: Total revenue bridge
Total revenue bridge £m 370 ORGANIC CONSTANT CURRENCY1 1.1 3.7 REVENUE GROWTH 31.3 2 2.8 360.7 360 357.3 (4.6) +2% Language Services (3.4) 350 +5% Regulated Industries 340 330 Language & Content 326.4 +2% Technology 320 -8% IP Services 310 300 +1% Group 2021 H1 Acquisitions Language Regulated Langua
Slide 11: Net debt/cash bridge
Net debt/cash1 bridge £m 1 Net debt/cash comprises cash and cash equivalents less loans but before lease liabilities 11 © 2022 RWS
Slide 12: Balance sheet
Balance sheet Non-current assets As at As at 31 March 2022 30 September 2021 • Goodwill increased £17.4m or 2.8% following the (£m) (£m) acquisition of Fonto and impact of FX during the period Non-current assets 1,071.5 1,059.4 • Intangible assets have fallen £2.8m due to Trade and other receivables
Slide 13: Investing to support accelerated growth
Investing to support accelerated growth Capex¹ Opex Payback period • Investment behind sales enablement Long-term <12 BAU opex - £7m relationships • Drive new logos and grow existing months accounts Cultural and Increase • Technology platform to support Data Annotation services 12-24 technical compe
Slide 14: Investments governed by capital allocations policy
Investments governed by capital allocations policy Continued strong cash generation demands disciplined capital allocation Continue to support the divisions to drive base case BAU spend organic growth and sustain infrastructure Invest to accelerate Invest in growth areas, technology products and 1 o
Slide 15: Agenda
Agenda Overview Financial Review Strategic and Operational Review Current Trading and Outlook Appendix 15 © 2022 RWS
Slide 16: Strategy on a page
Strategy on a page Purpose Why we exist Unlocking global understanding A unique, world leading technology-enabled language, content Our business Who we are and IP services business Through content transformation and multi-lingual data analysis, our unique combination of technology and cultural Propo
Slide 17: Strong portfolio, unique production platform
Strong portfolio, unique production platform Language Regulated Language & IP Services Services Industries Content Technology • Patent translation and OPERATING DIVISIONS • Localisation solutions • Life sciences • Linguistic AI - neural filing to multiple verticals MT • Financial services • Search,
Slide 18: Language Services
Language Services Group revenue share: HY22 – 44% (FY21 – 46%) Client wins across all three segments; growth in eLearning; Data Services proposition developing Performance Revenue¹ (£m) Adjusted Operating Profit² (£m) • 2% organic growth at constant currency, with 200 30 several new client wins and
Slide 19: Regulated Industries
Regulated Industries Group revenue share: HY22 – 24% (FY21 – 23%) Strong penetration in Linguistic Validation; revenue growth in 14 of top 20 clients Performance Revenue¹ (£m) Adjusted Operating • 5% organic growth at constant currency 90.0 5% Profit² (£m) • Continued penetration of Linguistic Valid
Slide 20: Language and Content Technology
Language and Content Technology Group revenue share: HY22 – 17% (FY21 – 15%) Return to organic growth; SaaS revenue growth ahead of plan Performance Revenue¹ (£m) Adjusted Operating 80 Profit² (£m) • 2% organic growth in constant currency, even 25 after increased SaaS revenues, which were ahead of p
Slide 21: IP Services
IP Services Group revenue share: HY22 – 15% (FY21 – 16%) Transformation programme and strengthened sales capability key to mitigating impact of Unitary Patent Performance Revenue¹ (£m) Adjusted Operating • 8% revenue decline at constant currency, 70 Profit² (£m) reflecting weak demand due to impendi
Slide 22: Environmental, social and governance
Environmental, social and governance • Moved to new online platform to facilitate measurement / tracking of carbon emissions; on track to submit science-based targets to SBTi for validation in FY23 using FY22 as baseline Environmental • Currently preparing disclosure to CDP on climate change • Purpo
Slide 23: Agenda
Agenda Overview Financial Review Strategic and Operational Review Current Trading and Outlook Appendix 23 © 2022 RWS
Slide 24: Phased returns
Phased returns FY22-24 FY24-26 Invest for growth Improved growth and leverage Organic Revenue In line with Market Organic Revenue Outperform Market Growth market growth1 = 4% Growth market growth1 = 6% Adjusted PBT2 FY23 slight FY24 recovery Adjusted PBT2 200-300 Margin % Change reduction to FY22 le
Slide 25: FY22: Current outlook
FY22: Current outlook • Encouraging initial signs of organic growth in L&CT - benefits of reorganisation starting to show Growth • New client wins in Language Services and Regulated Industries • Focused efforts on growth levers (e.g. Linguistic Validation, eLearning, GoGlobal and Data Services) star
Slide 26: Q&A
Q&A 26 © 2022 2021 RWS
Slide 27: Agenda
Agenda Overview Financial Review Strategic and Operational Review Current Trading and Outlook Appendix 27 © 2022 RWS
Slide 28: Investment proposition
Investment proposition Attractive Unique Strong cash Consolidation markets + platform + generation + opportunity • Well diversified • Largest linguist • Value creation • Fragmented markets • Strong growth network track record • Proven M&A success potential • True global coverage • Optionality to inv
Slide 29: RWS positive demand drivers
RWS positive demand drivers Increasing ESG Changing Explosion of Continued Growth in AI / / regulatory globalisation data / content innovation automation requirements market Annual volume >3k rules/regulations Capex investment AI to contribute Value of global trade of data to reach added annually to
Slide 30: Market size
Market size Area Mkt Size (£bn) Language Services – core localisation 30.0 Language Services – data annotation 2.0 Life Sciences – localisation 3.0 Finance & Legal – localisation 4.0 Linguistic AI 3.0 Language Technology 0.3 IP Services 2.0 Content Technology 2.8 Total 47.1 30 © 2022 RWS Sources: OC
Slide 31: Our values
Our values X X = We play as one team – We shape the future – We choose to be We keep our promises with colleagues, clients combining the best of positive – using every – to clients, colleagues and partners people and technology experience to grow and communities 31 © 2022 RWS
Slide 32: Shareholders
Shareholders As of 30 April 2022 Top shareholders Holding (%) Andrew S Brode 23.2 Liontrust Asset Management 9.6 Octopus Investments 4.3 RGM Capital 3.5 Canaccord Genuity Wealth Management 3.1 32 © 2022 RWS
Slide 33: About RWS
RWS Holdings plc is a unique, world-leading provider of technology-enabled language, content and intellectual property services. Through content transformation and multilingual data analysis, our unique combination of technology and cultural expertise helps our clients to grow by ensuring they are u