RWS Holdings Plc – Final Results

RWS Holdings plc

Results for the year ended 30 September 2021

A significant year for the Group, with profit ahead of market expectations

RWS Holdings plc (“RWS”, “the Group”), a world leading provider of technology-enabled language, content and IP services, today announces its final results for the year ended 30 September 2021.

Financial highlights

[1]   RWS uses adjusted results as key performance indicators as the Directors believe that these provide a more consistent measure of operating performance. Adjusted profit before tax is stated before amortisation of acquired intangibles, share based payment expense, acquisition costs and exceptional items. Adjusted earnings per share adjusts for amortisation of acquired intangibles, share based payment expense, acquisition costs and exceptional items, net of associated tax effects.

2 Net debt comprises loans less cash and cash equivalents excluding lease liabilities.  

3   Organic CC (“OCC”) – represents a like-for-like comparison between reporting periods. It is calculated by adding pre-acquisition revenues for SDL, Webdunia and Iconic on a common basis for the period in 2020 which corresponds to the post acquisition period in 2021 and by applying prior year exchange rates in both reporting periods. Additionally, Horn & Uchida's results were excluded from both years as it was acquired in July 2021.

A Year of Significant Strategic Progress

• Created a world leading provider of technology-enabled language, content and IP services following the acquisition of SDL plc (“SDL”)
• The Group is in an excellent position, having doubled its size and added new client relationships and capabilities, as a result of the acquisition of SDL
• Now highly technology-enabled, which positions RWS well to deliver new solutions to clients, drive further operating efficiencies and be at the forefront of the technology-led evolution of our industry
• The integration of SDL is well progressed, with significant synergies delivered and more to be realised as we see the full year effects in FY22
• CEO transition has gone well, with a unified Executive Team
• Enhanced the Board with the appointment of three new non-executive directors
• Good progress made with implementing the Group's ESG strategy

Group Highlights

• Well progressed with integrating SDL into the Group, delivering cost synergies of £16.4m during the year.
• Revenue grew on both a reported and organic constant currency (“OCC”) basis across all divisions of the Group
• Stronger than expected margin performance primarily reflecting synergies delivered proposing a final dividend of 8.50p (2020: 7.25p), representing a 17% increase in the total dividend

Language Services

• Revenues increased to £317.6m (2020: £171.3m), an 85% increase over the prior year, and were 4% higher on an OCC basis
• Adjusted operating profit increased by 92% to £47.4m (2020: £24.7m)
• Growth driven by strong sales to major global technology and commercial clients

Regulated Industries

• Revenues increased to £162.9m (2020: £71.3m), an increase of 128% over the prior year, and were 8% higher on an OCC basis
• Adjusted operating profit increased 35% to £28.4m (2020: £21.0m)
• A strong performance across Life Sciences, led by the division's higher value linguistic validation offering

IP Services

• Revenues increased to £113.6m (2020: £112.8m), an increase of 1% over the prior year, but were 2% higher on an OCC basis
• Adjusted operating profit increased by 7% to £32.3m (2020: £30.2m
•  Integration of Horn & Uchida acquisition progressing well

Language & Content Technology

• Revenues increased to £100.4m (2020: £0.4m) and were 1% higher on an OCC basis
• Adjusted operating profit was £22.6m (2020: £nil).
• Reflects planned change in licence mix towards a SaaS licensing model continuing

Current Trading and Outlook

• Now focused on capitalising on the Group's expanded scale, footprint and capabilities for clients, to drive sustainable organic growth from an efficient cost base
• Trading in line with our expectations for the full year, driven by:
• Continued organic revenue growth at constant currency
• Significant further operating margin expansion as we realise full year synergies and continue to enhance efficiencies following the acquisition of SDL

Strong cash generation and balance sheet supports plans to invest for growth, including in software and internal systems, and in selective acquisitions to enhance the Group's capabilities and geographical reach

A further update on the Group's medium term growth strategy and investment plans will be given at a Capital Markets Day in March 2022

Ian El-Mokadem, CEO of RWS, commented :

“The Group has delivered a strong set of results against the background of the Covid-19 pandemic and integrating SDL. I am proud of the manner in which our world-wide team have continued to provide our products and services to the high-quality standards expected by our broad range of world leading clients.

“All our divisions grew revenues on an organic constant currency basis and we are particularly pleased with the pace and effectiveness of our integration of SDL, which contributed to a better than expected profit performance.

“Current trading is in line with our full year expectations and I am confident that we are now in a stronger position than ever, with an excellent team in place to drive the business forward and build on its leadership of its growing, fragmented markets.

“With a healthy balance sheet to support the Group's strategy, I am excited about the plans we are developing to build on RWS's longstanding track record of delivery, as we ca pitalise on the Group's expanded scale, footprint and capabilities following the acquisition of SDL.

“Our expectations for the full year remain unchanged.”