REG - RWS Holdings PLC - Half-year Report
Tue 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250617:nRSQ0775Na&default-theme=true
RNS Number : 0775N RWS Holdings PLC 17 June 2025
For immediate
release
17 June 2025
RWS Holdings plc
Half Year Report for the Six Months ended 31 March 2025
Continued organic growth momentum in first half and new growth strategy
unveiled to accelerate growth and position RWS as the content solution partner
of choice
RWS Holdings plc ("RWS", "the Group", "the Company"), a content solutions
company, powered by technology and human expertise, today announces its half
year results for the six months ended 31 March 2025 ("the first half", "H1
2025" or "HY25") and sets out details of its new growth strategy.
Financial overview
H1 2025 H1 2024 Change
Revenue £344.3m £350.3m -2%
Adjusted EBITDA¹ £38.1m £64.2m -41%
Adjusted profit before tax¹ £18.0m £45.6m -61%
Reported (loss)/profit before tax £(12.7)m £17.3m -173%
Adjusted basic earnings per share¹ 3.6p 9.1p -60%
Basic (loss)/earnings per share (3.1)p 3.0p -203%
Interim dividend 2.45p 2.45p 0%
Cash conversion¹ 171% 30% +141% pts
H1 2025 FY 2024 Change
Net debt² £(27.0)m £(12.9)m -£14.1m
H1 2025 highlights
• Further progress made on organic constant currency ("OCC")³ revenue
with three of the four divisions growing in the first half, resulting in
overall OCC growth of +1.4% (H1 FY24: -2%), continuing the return to growth
seen in the second half of FY24
• High client retention levels, with 94% repeat services revenue (H1
FY24: 93%) and record NPS score of +51 for the 12 months to 31 March 2025 (H1
FY24: +36). New logos secured across all divisions and in a wide range of end
markets
• Strong performance in AI and technology, with continued momentum in the
Language & Content Technology division ("L&CT") and an increase in the
proportion of Group revenues delivered from AI-centred products and services
to 26% (H1 FY24: 25%)
• Reported revenue of £344.3m, a 2% decline on the prior period
(HY24: £350.3m)
• Lower gross margins of 43.3% (HY24: 45.7%), primarily driven by a
weaker performance in Regulated Industries and continuing pricing pressure in
Language Services. The overall mix was also impacted by the ramp-up of TrainAI
and APAC
• 84% of localisation volume in Language Services and Regulated
Industries (H1 FY24: 73%) now managed by Language eXperience Delivery ("LXD"),
our production platform, with almost 60% of this content machine-translated
first by Language Weaver, broadly in line with prior year
• Adjusted profit before tax¹ ("PBT") of £18.0m (HY24: £45.6m),
predominantly due to the impact of £22m of non-trading items, including
foreign exchange, increased amortisation, the impact of the sale of PatBase
and an increase in the proportion of technology investment being expensed in
the year. The balance is due to the £6m gross profit impact of the mix
changes noted above, all as previously announced. As a result, adjusted profit
before tax¹ margin was 5.2%, down from 13.0% in HY24
• Modest net debt² position of £27m at 31 March 2025 (FY24: net debt
of £13m), after payment of the £37m final dividend for FY24 during the first
half
• Interim dividend of 2.45p (HY24: 2.45p)
Divisional revenue performance
• Language Services grew on a reported and an OCC³ basis, driven by
our data services solution, TrainAI, continuing to deliver on significant
programmes and a strong performance in APAC with new logo wins and retentions
with several globally-recognised brands
• L&CT had a strong first half, with reported and OCC³ growth
driven principally by Propylon and Language Weaver. The proportion of SaaS
licences in the division grew to 43% (H1 FY24: 39%), in line with our plans
• In IP Services, growth in the renewals segment underpinned the
division's positive OCC³ performance, with strong momentum through the second
quarter. The division's reported revenue decline is primarily due to the
divestment of PatBase which took place in May 2024
• Regulated Industries' revenue declined on a reported and an OCC³
basis, driven by reduced activity and a one-off impact of significant changes
made in our Linguistic Validation management and sales team to address
performance. We have now refreshed our go-to-market approach
Full year outlook
• We anticipate continued modest organic growth through the second half,
thereby delivering low single digit OCC³ growth for the full year, in line
with previous guidance
• The Group continues to expect to deliver adjusted PBT in the range of
£60m-70m for FY25, as previously guided, based on an H2 GBP / USD FX rate of
1.33
New growth strategy to drive accelerated growth, higher quality earnings and margin accretion in the medium-term
• We set out today our new strategy to accelerate growth and position RWS
as the content solution partner of choice for enterprises
• The key pillars of this strategy will be the implementation of:
• New, simplified go-to-market positioning - that makes our services
more compelling and easier to buy, enables a stronger focus on and
accountability for delivery with an appropriate cost base that enhances our
competitiveness. We will organise the Group into three business units where
we have competitive advantage:
• Generate - our content technology and TrainAI businesses
• Transform - our localization businesses, including language
technologies and services; and
• Protect - our IP Services business
• Driving organic growth by establishing regional sales teams - to
bring more of our product suite to customers, increasing share of wallet and
better enabling acquisition of new client logos
• A new, technology-first proposition - that embeds us in our
customers' operations, by easily integrating with their systems while
delivering output highly tailored to their brand's tone of voice - making us
easier to work with, a more critical part of their organisation, and able to
shift to more predictable revenue models (SaaS, subscription or fixed):
• Recently appointed Chief Product & Technology Officer,
Christina Scott who will lead the development and commercialization of new
products with a focus on AI-driven language solutions that integrate fully
with enterprises' ecosystems, building on our existing strong technology suite
• In support of this technology-first approach we are announcing
today that RWS has acquired the IP of Papercup, a pioneer of prosody-capable
dubbing technology. We propose to integrate dubbing and sub-titling
capabilities into Trados to offer high-quality, human-in-the-loop dubbing to
media and enterprise clients, who expect demand for both scale and quality in
the fast-growing dubbing market
• Driving efficiency through automation and AI, combined with strong
cost control - enabling a competitive cost-to-serve, protecting margin in the
near term and supporting margin improvement in the medium-term
• A high-performance culture, with better data and insights to inform
decision-making and a cultural transformation to break down barriers to
collaboration
• In the coming months, we will be focussed on putting our strategy
into action, as we develop detailed plans for each division, confirm our
operating model design, and verify our 3-year plan. On 1 October, we will
begin operating the Group under the Generate, Transform and Protect business
units and we will go live with our revised sales and marketing structures to
support stronger organic growth. At our FY25 results in mid-December, we will
set out medium-term guidance and new KPIs.
Ben Faes, Chief Executive Officer of RWS, commented:
"The Group's first half results reflect our focus on organic revenue
performance, with OCC³ growth now being delivered in three of the four
divisions. Particularly encouraging are the new logo wins and retentions with
several globally-recognised brands that have driven growth in the APAC region,
a strong performance from L&CT and a solid end to the first half in IP
Services.
"Our AI-focused solutions continue to gain meaningful traction as we work
closely with our clients to leverage technology both to create value and drive
efficiency. However, changes in our mix of work and to new delivery models for
certain clients have impacted profitability during this transition phase. We
anticipate continued modest organic growth through the second half, delivering
OCC³ growth for the full year. We recognise that there is much to do to
improve the Group's performance and it is in this context that we have
conceived our new strategy.
"From my first few months immersion in the business it is clear that RWS
delivers critical value to many of the largest companies in the world. We have
an incredible portfolio of IP and technologies and we operate on a truly
global scale, at a speed and quality that others find hard to match, clearly
demonstrated by our very high NPS score. In parallel, the global content
explosion, shift to multimedia content and the pace of technology change are
rapidly changing the markets that we serve.
"Against this backdrop RWS must fundamentally change the way it operates. The
strategy that I am announcing today will put technology and product centre
stage, as the beating heart of our business. We are moving to a simpler
structure with the three pillars of generate, transform and protect and
simplifying our go to market. We are developing a culture of clear ownership
and accountability across the Group. This is more than incremental improvement
- this is about strategically repositioning RWS to stay relevant to client's
future needs and to create value for shareholders.
"We have already taken steps to start implementing this strategy. Organic
revenue growth is our key priority. We have launched a new brand identity for
RWS, reflecting the technology DNA of the business. We recently appointed
Christina Scott, as Chief Product & Technology Officer, who has begun to
lead the re-organisation of our product and technology teams and our product
suite. We have also launched a number of programmes to design and deliver the
key changes - to our technology strategy, our delivery systems, our
go-to-market strategy and data-driven decision-making. Having helped to shape
the strategy and the establishment of these programmes, our executive team is
highly energised about the new direction we are taking the business in.
"I am confident that this new growth strategy will allow RWS to become the
content solution partner of choice, able to deliver accelerated and profitable
growth and acquire additional capabilities through focused M&A."
Analyst Presentation:
An interim results presentation for analysts and investors will be held today
at 09:30 BST. For those who would like to attend, please contact
RWS@mhpgroup.com. A recording of the webcast will be made available on the
Group's website via: https://www.rws.com/about/investors/results-and-reports/
(https://www.rws.com/about/investors/results-and-reports/) .
For further information, please contact:
RWS Holdings plc
Ben Faes, Chief Executive Officer
Candida Davies, Chief Financial Officer 01628 410100
MHP (Financial PR Adviser) rws@mhpc.com 020 3128 8100 07884 494 112
Katie Hunt / Eleni Menikou
Deutsche Numis (Nomad & Joint Broker)
Stuart Skinner / William Wickham 020 7260 1000
Berenberg (Joint Broker)
Ben Wright / Toby Flaux / Mike Burke / Milo Bonser 020 3207 7800
About RWS:
RWS is a content solutions company, powered by technology and human expertise.
We grow the value of ideas, data and content by making sure organizations are
understood. Everywhere.
Our proprietary technology, 45+ AI patents and human experts help
organizations bring ideas to market faster, build deeper relationships across
borders and cultures, and enter new markets with confidence - growing their
business and connecting them to a world of opportunities.
It's why over 80 of the world's top 100 brands trust RWS to drive innovation,
inform decisions and shape brand experiences.
With 60+ global locations, across five continents, our teams work with
businesses across almost all industries. Innovating since 1958, RWS is
headquartered in the UK and publicly listed on AIM, the London Stock Exchange
regulated market (RWS.L).
For further information, please visit: (http://www.rws.com/) www.rws.com
(http://www.rws.com/) . (http://www.rws.com/)
Forward-looking statements
This announcement contains certain statements that are forward-looking. These
include statements regarding our intentions, beliefs or current expectations
and those of our officers, Directors and employees concerning, amongst other
things, our results of operations, financial condition, liquidity, prospects,
growth, strategies and the business we operate. By their nature, these
statements involve uncertainty since future events and circumstances can cause
results and developments to differ materially from those anticipated. The
forward-looking statements reflect knowledge and information available at the
date of preparation of this document and, unless otherwise required by
applicable law, RWS undertakes no obligation to update or review these
forward-looking statements. Nothing in this announcement should be construed
as a profit forecast. RWS and its Directors accept no liability to third
parties in respect of this document save as would arise under English law.
1. RWS uses adjusted results as key performance indicators as the
directors believe these provide a more consistent measure of operating
performance. The definitions for these key performance indicators can be found
in the Appendix.
2. Net debt comprises cash and cash equivalents less loans but before
deducting lease liabilities.
3. Adjusted to reflect a like-for-like comparison between reporting
periods and assumes constant currency across both reporting periods.
RWS Holdings plc
Results for the Six Months ended 31 March 2025
Chief Executive Officer's Review
The Group's performance in the first six months of the year ("the first half",
"H1 2025" or "HY25") reflects our focus on organic revenue, with OCC¹ growth
now being delivered in three of the four current divisions. It was
particularly encouraging to see new logo wins and retentions with several
globally-recognised brands that have driven growth in the APAC region, a
strong performance from L&CT and a solid end to the first half in IP
Services. Our AI-focused solutions continue to gain meaningful traction as we
work closely with our clients to leverage technology both to create value and
drive efficiency. However, changes in our mix of work and to new delivery
models for certain clients have impacted profitability during this transition
phase. We anticipate continued modest organic growth through the second half,
delivering OCC¹ growth for the full year. However, we recognise that there is
much to do to improve the Group's performance and it is in this context that
we have conceived our new strategy.
New strategy to accelerate growth
Since joining five months ago, I have carried out a thorough review of the
business and spent a considerable amount of time meeting with stakeholders,
including our customers, employees and investors.
This work has concluded that RWS delivers critical value to some of the
world's largest companies (more than 80% of the world's top brands), we have a
strong portfolio of proprietary technologies, and we operate on a truly global
scale at a speed and quality that others find hard to match, supported by many
talented teams. Our clients, including the vast majority of leading companies
in the asset management, investment banking, legal, medical device,
pharmaceutical and technology markets, are longstanding and satisfied, with a
+51 NPS score on a 12-month rolling basis to 31 March 2025 (HY24: +36 NPS).
It is also clear that the transition in our markets, driven predominantly by
rapid developments in AI and a global content explosion, presents clear
opportunities for the business if it undertakes the fundamental change
required to stay relevant for its clients' future needs.
We have, therefore, identified a clear need to reposition the business for the
future, as a content solutions company, powered by technology and human
expertise to maximise the value of clients' content, data and ideas. This
strategy builds on the Group's strengths and puts technology and product at
the heart of our business. As set out below, there are five distinct pillars
to our new strategy to accelerate growth and position RWS as the AI-powered
end-to-end global content partner that clients need today and tomorrow.
Strategy pillars
The key pillars of the new strategy are:
· New, simplified go-to-market positioning that makes our services more
compelling and easier to buy, enables a stronger focus on and accountability
for delivery and an appropriate cost base that enhances our competitiveness.
Organised into three business units where we have competitive advantage:
o Generate - our content technology and TrainAI businesses
o Transform - our localization businesses, including language technologies
as well as services; and
o Protect - our IP Services business
· Driving organic growth by establishing regional sales teams - to
bring more of our product suite to customers, increasing share of wallet and
better enabling acquisition of new client logos
· A new, technology-first proposition - that embeds us in our
customers' operations, by easily integrating with their systems while
delivering output highly tailored to their brand's tone of voice - making us
easier to work with, a more critical part of their organisation, and able to
shift to more predictable revenue models (SaaS, subscription or fixed)
· Driving efficiency through automation and AI, combined with strong cost
control - enabling a competitive cost-to-serve, protecting margin in the near
term and supporting margin improvement in the medium-term
· A high-performance culture - with better data and insights to improve
decision-making, and a cultural transformation to break down barriers to
collaboration
Market context
AI advances are driving performance breakthroughs and reshaping supply and
demand across many industries. In RWS's markets, value is shifting from
traditional human solutions delivery to scalable, technology-driven solutions.
Our commitment to elevating technology and product in our propositions is
essential to thrive in this new landscape, where AI-first language platforms
are increasingly core to both day-to-day delivery and a source of
differentiation.
Against this backdrop RWS must fundamentally change the way it operates in
order to stay relevant to clients' future needs and create value for
shareholders. We are putting technology and product centre stage, as the
beating heart of the Group. We are rethinking our go-to-market, with a
simplified positioning and set of propositions, and will develop closer
relationships with clients, by bringing more of our product suite to them,
differentiating ourselves amidst increased competition in the market. We will
also move to a simpler, cleaner structure which will provide clear ownership
and accountability across the Group and allow us to drive a stronger
performance culture, supported by effective, data-driven decision-making.
Positioning and proposition
RWS has commonly been thought of as a localisation company. In fact I believe
it is best seen as a business that helps customers monetise their content -
RWS is a content solutions business. Content is exploding. While technology
has enabled this explosion, AI has supercharged it in the last 2.5 years.
Indeed, more content was created in the last 18 months than in the previous 30
years. Content is more personalised, more multimedia in nature and more
AI-generated than ever. This content explosion is creating complex issues for
companies in controlling and managing their workflows whilst maintaining their
brand, tone and data security. At its heart, RWS helps its clients maximise
the value of their content, data and ideas in three ways:
· We help them Generate better content and data, at scale
· We help them Transform their content so their audiences can
connect with it
· We help them Protect their ideas and innovations
While the content market is huge and diverse, RWS is focusing on these
businesses because we already have a strong market presence, each has
significant growth potential and all have segments where we have an existing
competitive advantage.
Generate
RWS provides solutions that enable organizations to organise, enrich and
meticulously manage the publication of their content and data. While
generative AI empowers content creation at scale, we ensure this creation is
rooted in robust, comprehensible data, supported by structured, authored
approaches for critical content types.
Our capabilities span multilingual data annotation, reinforcement learning
with human feedback (RLHF), prompt and instruction tuning, safety and bias
testing and synthetic data validation. By combining deep linguistic expertise
with scalable workflows and platform integrations, we enable LLM builders and
enterprise AI teams to improve model accuracy, reduce hallucination rates,
ensure cultural and domain relevance and meet stringent compliance
requirements. We deliver high-quality, domain-specific data that enhances
model performance and mitigates bias. Our teams serve as the crucial human
layer, teaching AI to understand nuance, context and real-world relevance -
-transforming raw algorithms into powerful, reliable and inclusive AI
solutions. We are currently working with two of the top four largest LLM
builders (West Coast technology businesses) to help them increase the accuracy
of their models and to teach machines how to better understand the
ever-changing human world.
This business unit is 'Generate', represents approximately a sixth of Group
revenue and is made up of RWS's existing content technology business and the
TrainAI business. The value of the Generate market is estimated to be
c£6bn², with a market growth rate of 9-10%² in content technology and
20-22%² in AI data services.
We expect to be able to accelerate growth in the medium term in our Generate
business by:
· building a highly robust, scalable platform to support the growth
opportunities we see in training AI models, for both global technology
companies and other AI builders; and
· leveraging our leading technology platforms in a nascent content
management market which will only become more critical to organisations as
content proliferates and becomes more personalised.
Transform
Content is worth something only to its consumer. Enabling new consumers to
interact with content is critical for all organisations. Transforming content
to make it engaging to a wider audience is the core of RWS's skillsets. This
includes everything from localisation and cultural adaptation to testing and
applies to all content formats - text, voice, video, audio, software and
increasingly, a dynamic blend of all five.
Within large enterprises, language adaptation permeates numerous critical
functions, including product localization, software internationalization,
internal communications, marketing campaigns, legal documentation and security
protocols. Unlike B2C scenarios, where minor errors may be tolerated, mistakes
in enterprise language can lead to severe consequences, including brand
damage, regulatory non-compliance and financial loss. Research from Forrester
indicates that poor localization can also result in a 20-60% decrease in
customer satisfaction.
Enterprises demand customised and integrated language solutions capable of
delivering high-quality translations at unprecedented speeds. They need our
guarantee that we will operate in a secure environment and maintain the
privacy of their assets. Current market trends emphasise a need for more
language pair availability, faster turnaround times and greater affordability,
thereby expanding access to a broader market.
The environment we are operating in is changing rapidly, marked by significant
shifts driven by AI. The overall language industry market is substantial,
sized at approximately £24bn² in 2025. However, the traditional core of this
market, focused on language conversion for speech and text between languages,
has seen a contraction. Slator's legacy market data shows a 2%³ overall
market contraction from 2023 to 2024, with Language Solutions Integrators
("LSIs") like RWS, who have historically focused on human-managed services,
experiencing a 3%³ decline in that legacy scope during 2024. This underscores
the challenges facing traditional models, but crucially, this contraction is
happening alongside rapid growth in technology-driven solutions. Language
Technology Platforms ("LTPs") saw a 12%³ growth in the legacy scope in 2024.
Our strategy must pivot to capture this shifting value and we have the
foundations to do so.
A technology-first proposition
Historically, RWS has disrupted the market through our MT and LLM solutions
and we will continue to do so. Localisation of content at scale often remains
a difficult and costly process for clients, but it need not be. As part of our
reorganisation, we have moved all of our linguistic technologies under the
leadership of Christina Scott, whose mission is to build our technology stack
with one clear vision: Global by Design. Global by Design is the localisation
industry equivalent of established concepts like Privacy by Design and
Security by Design. It will emphasise the incorporation of localisation
requirements at the point of content creation, rather than at the end of the
value chain. For instance, ServiceNow, one of our customers, has moved the
definition of software readiness to include fully localised experience. It is
not an after-thought, it is rooted in the design.
Our vision for the future of localisation is that it will be first and
foremost a technology solution, enabling more automation and embedded into the
technology stack of an organisation, reflecting its tone of voice, its brand,
its lexicon and integrated seamlessly with enterprise systems, including:
· Productivity Suites (Microsoft 365, Google Workspace)
· Marketing Automation (Adobe, HubSpot)
· Software Development Tools (GitHub, Jira, Figma)
· Contract & Legal Management (DocuSign, Ironclad, SAP Ariba)
Trados is already the language technology platform software of choice for the
localisation industry, from freelancers (c300,000 unique users quarterly) to
large enterprises. Previously we have invested to offer a full Cloud-based
solution, we've integrated Language Weaver into the product and we have added
a suite of AI functionalities to help translation and workflow be more
efficient for users.
I am delighted to announce today that RWS has acquired the IP of Papercup
which will enable us to integrate full multimedia capabilities from dubbing to
sub-titling into Trados. Our acquisition of Papercup's IP positions us
strongly in the high-growth AI dubbing market, estimated at USDc.1bn⁴ in
2024, where 92% of the market is driven by AI dubbing LTPs. Papercup's focus
on high-quality, human-in-the-loop dubbing aligns perfectly with the demand
for scale, speed and quality in this exploding multimedia content space.
We see three options for organisations to manage their content and language
needs in future:
· SaaS option integrating into clients' technology stacks - ideal
for immediate content, with lower quality requirements
· Managed Services - enterprises outsource to RWS the management
of the entire content workflow within the Trados tool - ideal for large brands
publishing a high volume of content in 40+ languages
· Professional services - provision of language specialists for
specific needs such as linguistic validation, post edit, UX testing - ideal
for life science, software testing, legal validation
Within the overall £24bn² market, LSIs, who deliver managed outcomes, still
capture the majority of buyer spend - roughly 87% or approximately £21bn² in
2024. Buyers, particularly large enterprises, continue to want managed
solutions and outcome ownership. They need a partner who takes end-to-end
responsibility for integrating AI and human expertise to deliver assured
language outcomes.
However, the Language Technology Platform (LTP) market, focused purely on
technology, is the faster-growing segment. It accounted for 13% or
approximately £3bn² of the total market in 2024 and is projected to grow at
a CAGR of c.16% to reach £8bn² by 2030. Our strategy for the Transform
pillar (which represents approximately two-thirds of Group revenue) is
designed to better position RWS to capture both the demand for managed
solutions (where LSIs are strong) and the high-growth technology segment
(where LTPs are strong), leveraging the strengths of the Group across the two.
Our vision for the Transform business unit over the next three years is:
· Revenues will shift more and more to a SaaS model, which we are
well set up to capture
· We will increase the absolute number of clients
· The language mix will evolve, with a greater share of tier two
languages - meaning greater demand for broader-based providers
· Multimedia content will explode and will need scalable quality
dubbing solutions from enterprise-grade providers
· The nature of language specialists' work will change dramatically
towards review and validation
We, therefore, expect the Transform business in the medium-term to deliver
higher quality earnings from a higher proportion of recurring revenues with
enhanced margins by leading with technology-led solutions, offsetting an
anticipated softening in traditional language service revenues.
RWS has the scale, breadth of capabilities, technology and client
relationships to take its language AI solutions beyond localization to become
core within the functionality of clients' enterprise systems.
Protect
We live in a world where innovation will never be as slow as it is today. In
2023 3.5m² patent applications were made, with 14% of them AI-related; of
that number, 60% originated in China. Originating as an IP translations
company, RWS has longstanding expertise in IP management and an established
presence in the market, along with many long-term client relationships.
Building on patent search, filing and translation foundations, RWS has
extended its offering to cover renewals and recordals, allowing us support
clients through the entire IP lifecycle. This 'Protect' pillar is our IP
Services business, a leader in its industry yet with a small share of its
estimated £2bn² market, which has a market growth rate of 4-5%², and is
typically resilient across the economic cycle.
RWS's vision for Protect is to become the digital IP platform of choice. We
will be end-vertical agnostic while focusing on the largest IP markets
globally. We will continue to invest in developing the IP platform capability
required to best serve clients across the entire lifecycle. In our Protect
business we expect to be able grow faster than the market, through a
combination of gaining new clients and growing share of wallet due to our
differentiated, across the lifecycle, proposition. This is expected to
generate higher quality of earnings driven by an increase in the proportion of
recurring revenues.
Strategy summary & next steps
Our new strategy will allow us to deepen significantly our strategic
relationships with large enterprises and become the critical solution provider
to a larger set of clients. Each of these business units anchors around a
strong technology platform which not only incorporates AI advancements but,
for most, benefits from the expanding AI market as they enable the growth of
third parties' technologies. The organisation for each business unit will
enable a sharper focus for each of them, with the relevant go-to-market,
adjusted delivery model and a specific investment profile. The revenue model
will also become clearer and more predictable as it shifts to a higher portion
of SaaS revenue, subscription or fixed FTE-based service.
In the coming months, we will be focussed on putting our strategy into action,
as we develop detailed plans for each business unit, confirm our operating
model design, and verify our 3-year plan. On 1 October, we will begin
operating the Group under the Generate, Transform and Protect business units
and we will go live with our revised sales and marketing structures to support
stronger organic growth. At our FY25 results in mid-December, we will set out
medium-term guidance and new KPIs.
Profit and Loss
The Group's revenues were £344.3m compared with £350.3m in the six months
ended 31 March 2024 ("HY24"), a 1.7% decline. On an OCC¹ basis revenues grew
1.4%, following growth in H2 FY24 of +2%. Gross margin declined to 43.3%
(HY24: 45.7%), primarily driven by weaker performance in Regulated Industries,
increased investments to support the ramp-up of TrainAI & large client
volume increases as well as adverse geographical mix as APAC's growth was
sustained in Language Services.
The Group achieved an adjusted PBT⁵ of £18.0m in the first half-year, a
decrease of 61% compared with £45.6m in HY24, predominantly due to £22m of
non-trading items, including foreign exchange, increased amortisation and the
impact of the sale of PatBase and an increase in the proportion of technology
investment being expensed in the year, with the balance due to the gross
profit impact of the mix changes noted above, as guided in April 2025. As a
result, adjusted profit before tax⁵ margin was 5.2%, down from 13.0% in
HY24. Adjusted profit before tax⁵ is stated before exceptional items,
share-based payment expenses and amortisation of acquired intangibles. On the
same basis, adjusted basic earnings per share⁵ decreased by 60% to 3.6p
(HY24: 9.1p).
Taxation
The adjusted effective tax rate⁶ for the Group was 25.6% (HY24: 25.1%). The
increase in the period is mainly as a result of an increase in the corporate
tax rate in the Czech Republic, one of the group's key operational
jurisdictions, from 19% to 21%.
Currency and FX
The Group remains exposed to movements in the US dollar exchange rate
reflecting the fact that the majority of revenues are denominated in US
dollars. The Group continues to hedge transactional risk while relying on
constant currency reporting to highlight underlying translation risk, which
remains unhedged. The Group uses forward exchange contracts to hedge risk at
both Group and divisional level.
Cash Flow
Net cash flow from operating activities was £37.2m⁵ (HY24: £37.4m). During
the first half, the major cash outlays were the final dividend of £36.9m,
intangible asset additions of £10.3m and tax payments of £9.1m. Cash
conversion was 171%⁵ as a result of improved cash collection. The high
percentage is skewed by the disproportionate impact of net working capital
improvement relative to the half year adjusted income. Cash conversion is
expected to revert to normal levels by the end of the period.
£5m cash was received as final consideration for the disposal of the Group's
interest in a revenue and cost sharing arrangement, together with some
associated assets, relating to a patent information resource business known as
"PatBase" in May 2024.
Balance sheet and liquidity
At 31 March 2025, shareholders' funds amounted to £869.9m (HY24: £909.0m).
At the same date, the Group had net debt⁷ of £27.0m (FY24: net debt
£12.9m), comprising cash of £69.5m less borrowings of £96.5m. RWS has a
cash generative business model and the Board is confident that the Group's
cash generation and liquidity put it in a strong position to further invest in
organic growth as well as explore suitable acquisition opportunities. In
addition to its cash reserves, the Group had drawn US$126.5m of its US$220m
banking facility, leaving headroom of US$93.5m at the period end and total
liquidity of £142m.
Dividend
The Directors have approved an interim dividend of 2.45p per share (HY24:
2.45p). This reflects the Group's strong financial position, its cash
generative business model and the Board's confidence in its future prospects.
The dividend will be paid on 18 July 2025 to shareholders on the register at
19 June 2025 and the ex-dividend date is 20 June 2025.
H1 Operating review
Language Services
Language Services focuses on localisation and related solutions for a wide
range of industry verticals, including automotive, chemical, consumer,
manufacturing, retail, technology, travel and telecommunications. The range of
services includes AI-centred localisation and data services, eLearning and
multimedia localisation. RWS's technology products, such as Language Weaver
and Trados, either underpin the division's services solutions (such as Evolve)
or are sold in combination with them. The division is able to support clients
at any stage of their globalisation journey.
The Language Services division, which represented 46% of Group revenues (HY24:
45%) in the period, generated reported revenues of £158.4m (HY24: £156.5m).
On an OCC¹ basis, Language Services grew 4%, driven by our data services
solution, TrainAI and a particularly strong performance in APAC with new logo
wins and retentions with several globally-recognised brands. We continue to
see reduced activity from some of our Americas clients as they have adapted
their priorities to changes in their end markets.
We have continued to deliver on the significant TrainAI programmes of work we
won in FY24 with a number of our West Coast technology clients and secured our
first piece of TrainAI work with another global technology company in the
first quarter of FY25. Clients are attracted to the enterprise-grade security
and privacy that RWS offers, as well as its strong ethical practices in the
sourcing and quality checking of data for training their AI models.
The division's adjusted⁵ operating profit was £6.4m (HY24: £15.3m),
impacted by increased competition on price, primarily in the non-West Coast
technology part of the division, adverse mix driven primarily by the
accelerated growth of our Train AI business and core localisation in APAC, as
well as the incremental investment to support the large client volume
increases outlined in the half year trading statement, with cost reduction
programmes offsetting inflation.
Regulated Industries
Regulated Industries provides a range of localisation services for three
verticals - life sciences, financial services and the legal sector. Service
provision is centred around highly specialised technical translations with a
strong emphasis on quality and security. The division's clients include 19 of
the world's top 20 pharmaceutical companies, all of the top 10 asset
management companies and 18 of the top 20 law firms. In the pharmaceutical and
medical device verticals, we work in both the clinical and regulatory phases
of therapy development and our services often make a critical contribution to
life safety.
Reported revenues were £65.6m (HY24: £71.8m), representing 19% of Group
revenues (HY24: 21%).
In Regulated Industries, reported revenue fell 9% and 7% on an OCC¹ basis.
Whilst we have seen some small growth with our life sciences clients within
the core localisation services we offer, we have also seen some reduced
activity with our finance and legal clients and a larger decline in our
linguistic validation business in the first half. We attribute the latter
partly to the changes made in our own management late last year and partly to
timing variations in client study pipelines. We anticipate a stronger H2 FY25
for LV as these clinical programmes advance into new phases.
Adjusted⁵ operating profit for Regulated Industries was £2.7m (HY24:
£7.5m), reflecting the reduction in top line revenues and mix changes.
Language & Content Technology
Language & Content Technology ("L&CT") offers a range of technology
products which deliver translation and content management solutions. A pioneer
in machine translation ("MT"), Language Weaver is a neural MT product, using
linguistic AI. With Trados, RWS offers a suite of translation productivity and
management solutions for enterprises, small and medium-sized organisations and
professionals. Tridion, Contenta and Propylon are the Group's portfolio of
content management products, which offer specialised solutions for multiple
end markets, including aerospace and defence, high-tech, law-makers and
law-takers, life sciences and manufacturing, alongside a leading XML editor
(Fonto). All these products offer clients enterprise grade privacy, security
and quality.
L&CT revenues were £71.2m (HY24: £68.8m) and accounted for 21% of Group
revenues (HY24: 20%).
The division had a strong first half, with 6% OCC¹ growth driven principally
by performance in Language Weaver and Propylon.
The proportion of SaaS licences as a percentage of total licence revenues in
the division grew to 43% (H1 FY24: 39%) and we achieved 12% reported growth in
SaaS licence revenues in the period compared with HY24, both as intended, and
further demonstrating the continued shift in our licence models to SaaS. This
transition gives us greater stability and predictability of future revenue
streams and helps build long-term value for FY25 and beyond.
In May 2025, Trados advanced its AI capabilities with the launch of Smart
Insights, enabling users to access real-time translation project data through
natural language queries - eliminating the need for complex reports. These
AI-powered insights help project managers quickly spot trends, mitigate risks,
and make confident decisions. This, alongside accessibility improvements in
the online editor, multi-file editing and a new live subtitle preview for
videos, demonstrates our continued commitment to embedding AI into everyday
workflows and delivering measurable productivity gains for all users.
We continue to make progress on the transition programme to Trados Enterprise
for clients of our legacy translation management products, having announced
end of life in March 2024. At 31 May 2025 51% of transitions had been
completed (HY24: 17%).
The division's in-house R&D team has continued to lead the development of
the AI-enabled Evolve solution, including the roll out of additional
language pairs - 27 were available as at 31 May 2025. Evolve has become a
standard part of our content translation process; the more it is used, the
more strongly it performs as our models learn from the decisions our post
editors make to change or accept Evolve's output.
Adjusted⁵ operating profit for the division was £8.5m (HY24: £12.8m),
impacted by reduced technology R&D capitalisation in the period, increased
amortisation from prior year investments and the intended transition from one
off licence purchases to a higher proportion of SaaS revenues, partially
offset by favourable pricing (via contract renewals) and ongoing cost
reduction efforts.
IP Services
IP Services is one of the world's leading providers of patent translations,
filing solutions and IP search, renewal, recordals and monitoring services.
The division delivers highly specialised technical translations to patent
applicants and their representatives and counts 19 of the world's top 20
patent filers as its clients.
In IP Services revenues were £49.1m (HY24: £53.2m), representing 14% of
Group revenues (HY24: 15%).
Revenue grew 1% on an OCC¹ basis, underpinned by strong performance in the
renewals and research segments (the latter after allowing for the lower
revenue resulting from the Patbase divestment) and the Worldfile segment for
filing and translations work. Within the Worldfile segment, the APAC region
performed strongly, underpinned by a significant new logo win with a major
Chinese online retailer.
The division delivered an adjusted⁵ operating profit of £10.5m (HY24:
£11.7m, restated to reflect the sale of PatBase), reflecting mix and
incremental investments in sales capability.
People
I have visited eleven RWS offices across the world, meeting with many teams
and understanding firsthand our technologies, our approach to service and how
colleagues are feeling. While it is clear that there is a mixture of
excitement and nervousness about the impact of AI, there is also a clear
appetite for the Group to lead our industry transition. There was a
universally positive response to the rebrand that we launched in the middle of
May and I am very committed to creating a more unified culture across the
Group. In parallel with actions to bring our refreshed values to life, I am
particularly determined to breaking down the organisational siloes that will
enable more effective collaboration across the Group.
Just after the end of the period Joseph Ayala joined RWS as Executive
Vice-President of Strategy and Corporate Affairs, with responsibility for the
Group's strategy, investor relations and global M&A. His role involves
identifying opportunities for growth and innovation in rapidly evolving
competitive landscapes, helping to improve communication to investors and
driving a disciplined M&A strategy to boost growth and capitalize on
market trends. Joseph brings 14 years' experience in senior leadership roles
within technology-enabled service companies, including Travelex and Webhelp,
where he led the company's successful buy-and-build strategy between 2015 and
2023. Prior to this he spent 14 years in investment banking at BZW, Credit
Suisse and Hawkpoint, where he advised public and private companies across a
range of industries on international M&A and equity/debt financing.
In May, Christina Scott joined the Group as Chief Product and Technology
Officer. Christina will lead the Group's global product and technology
strategy, shaping the innovation agenda and delivering scalable,
market-leading solutions. Her leadership will be instrumental in driving
growth, sharpening focus across the portfolio and bringing the Group's
ambitious roadmap to life. Christina is an experienced senior executive with a
proven record of delivering revenue growth and cost optimization across
complex technology, digital products and data solutions. She brings more than
25 years' experience working with blue chip companies, private equity and
start-ups undergoing large digital transformations and change programmes,
including OVO Energy, News UK, News Corp and the Financial Times.
Voluntary colleague attrition levels have fallen to 10.5% in the 12 months
ended 31 March 2025, compared with 12.4% for the 12 months ended 31 March
2024⁸.
At 31 March 2025 the number of full-time equivalent colleagues in the Group
was 9,403 (HY24: 7,814). The increase is due to the resources recruited to
support the increase in TrainAI business over the last 12 months.
ESG
On environmental matters, the Group's greenhouse gas ("GHG") emissions
reduction targets were approved by the Science Based Targets initiative
("SBTi") in May 2024. A range of green agenda programmes continues across the
Group to help ensure we are making the progress towards our targets. During
the first half our Scope 1 and 2 emissions were down significantly year on
year, as anticipated, but Scope 3 emissions rose. Nevertheless, with improved
performance expected in the second half, we anticipate we will hit our targets
for the full year.
Current trading and outlook
We anticipate continued modest organic growth through the second half, thereby
delivering low single digit OCC¹ growth for the full year, in line with
previous guidance. Adjusted⁵ PBT is expected to be in the range of £60m-70m
for FY25 as previously guided, based on an H2 GBP / USD FX rate of 1.33.
Benjamin Faes
Chief Executive Officer
17 June 2025
1. Adjusted to reflect a like-for-like comparison between reporting
periods and assumes constant currency across both reporting periods.
2. Industry reports and BCG analysis.
3. Slator 2025 Language Industry Market Report, May 2025.
4. Data Horizon Research, 2024.
5. RWS uses adjusted results as key performance indicators as the
directors believe these provide a more consistent measure of operating
performance. The definitions for these key performance indicators can be found
in the Appendix.
6. The adjusted effective tax rate is the effective tax rate before
exceptional items, amortisation of acquired intangibles, tax on exceptional
items and prior year adjustments.
7. Net cash comprises cash and cash equivalents less loans but before
deducting lease liabilities.
8. Calculated as number of leavers during the financial year, on a
rolling last twelve months basis, divided by average headcount over the same
period,
RWS Holdings plc: Condensed Consolidated Statement of Comprehensive Income
6 months ended 31 March 2025 6 months ended
(Unaudited) 31 March 2024
Note £ (Unaudited)
£
Revenue 2 344.3 350.3
Cost of sales (195.1) (190.0)
Gross profit 149.2 160.3
Administrative expenses (159.2) (140.5)
Operating (loss)/profit (10.0) 19.8
Analysed as:
Operating profit before charging: 20.7 48.1
Exceptional items - acquisition-related costs 4 (2.8) (4.3)
Exceptional items - other 4 (4.7) (0.8)
Share-based payment expenses (1.6) (1.7)
Amortisation of acquired intangibles (21.6) (21.5)
Operating (loss)/profit (10.0) 19.8
Net finance (costs) 3 (2.7) (2.5)
(Loss)/profit before tax (12.7) 17.3
Tax credit/(expense) 5 1.4 (6.2)
(Loss)/profit for the period from continuing operations attributable to the 2 (11.3) 11.1
equity holders of the parent company
Other comprehensive income/(expense)
Gain/(loss) on retranslation of foreign operations (net of deferred tax) 17.1 (23.7)
(Loss) on cash flow hedges (net of deferred tax) - (0.6)
Total other comprehensive gain/(expense) 17.1 (24.3)
Total comprehensive gain/(expense) attributable to owners of the Parent 5.8 (13.2)
Basic (loss)/earnings per ordinary share (pence per share) 7 (3.1) 3.0
Diluted (loss)/earnings per ordinary share (pence per share) 7 (3.1) 3.0
RWS Holdings plc: Condensed Consolidated Statement of Financial Position
31 March 2025 (Unaudited) 31 March 2024 30 September 2024
£m (Unaudited) (Audited)
Note £m £m
Assets
Non-current assets
Goodwill 582.6 593.8 570.8
Intangible assets 298.9 344.6 317.0
Property, plant and equipment 12.8 25.1 13.5
Right-of-use assets 20.0 24.6 22.7
Non-current income tax receivable 2.1 1.4 2.2
Deferred tax assets 2.1 1.0 2.0
918.5 990.5 928.2
Current assets
Trade and other receivables 206.5 227.3 211.2
Foreign exchange derivatives - 1.6 -
Income tax receivable 6.1 1.7 5.6
Cash and cash equivalents 8 69.5 64.6 61.5
282.1 295.2 278.3
Total assets 1,200.6 1,285.7 1,206.5
Liabilities
Current liabilities
Trade and other payables 143.6 160.6 127.7
Lease liabilities 5.0 9.0 8.5
Foreign exchange derivatives 1.6 - -
Income tax payable 9.8 15.0 14.3
Provisions 5.5 6.8 7.9
165.5 191.4 158.4
Non-current liabilities
Loans 9 96.5 103.5 74.4
Lease liabilities 18.6 20.8 18.7
Trade and other payables - 2.5 0.4
Provisions 1.5 5.9 1.5
Deferred tax liabilities 48.6 52.6 53.5
165.2 185.3 148.5
Total liabilities 330.7 376.7 306.9
Total net assets 869.9 909.0 899.6
Equity
Capital and reserves attributable to owners of the parent
Share capital 3.7 3.7 3.7
Share premium 56.0 54.5 54.5
Share-based payment reserve 8.0 7.0 8.1
Reverse acquisition reserve (8.5) (8.5) (8.5)
Merger reserve 624.4 624.4 624.4
Foreign currency reserve (14.7) 10.0 (31.8)
Hedge reserve - (4.1) -
Other reserve 0.1 - 0.1
Retained earnings 200.9 222.0 249.1
Total equity 869.9 909.0 899.6
RWS Holdings plc: Condensed Consolidated Statement of Changes in Equity
Share capital Share premium £m Other reserves (see below) £m Retained earnings £m Total attributable to owners of parent £m
£m
At 30 September 2023 3.8 54.5 651.4 277.6 987.3
Profit for the period - - - 11.1 11.1
(Loss) on cash flow hedges - - (0.6) - (0.6)
(Loss) on retranslation of foreign operations - - (23.7) - (23.7)
Total comprehensive (expense)/income for the period ended 31 March 2024 - - (24.3) 11.1 (13.2)
Purchase of own shares (0.1) - - (30.3) (30.4)
Dividends - - - (36.4) (36.4)
Share-based payments expense - - 1.7 - 1.7
At 31 March 2024 (unaudited) 3.7 54.5 628.8 222.0 909.0
At 30 September 2024 3.7 54.5 592.3 249.1 899.6
(Loss) for the period - - - (11.3) (11.3)
Gain on retranslation of foreign operations - - 17.1 - 17.1
Total comprehensive income/(expense) for the period ended 31 March 2025 - - 17.1 (11.3) 5.8
Issue of shares (net of issue costs) - 1.5 - - 1.5
Dividends - - - (36.9) (36.9)
Exercise of share options - - (1.5) - (1.5)
Share-based payments expense - - 1.4 - 1.4
At 31 March 2025 (unaudited) 3.7 56.0 609.3 200.9 869.9
Share Reverse acquisition reserve £m Foreign currency reserve Hedge reserve Total attributable to owners of parent
based payment Merger reserve £m £m £m
reserve £m Other reserve
Other reserves £m £m
At 30 September 2023 5.3 (8.5) 624.4 33.7 (3.5) - 651.4
Other comprehensive (expense) for the period ended 31 March 2024 - - - (23.7) (0.6) - (24.3)
Share-based payments expense 1.7 - - - - - 1.7
At 31 March 2024 (unaudited) 7.0 (8.5) 624.4 10.0 (4.1) - 628.8
At 30 September 2024 8.1 (8.5) 624.4 (31.8) - 0.1 592.3
Other comprehensive income for the period ended 31 March 2024 - - - 17.1 - - 17.1
Exercise of share options (1.5) - - - - - (1.5)
Share-based payments expense 1.4 - - - - - 1.4
At 31 March 2025 (unaudited) 8.0 (8.5) 624.4 (14.7) - 0.1 609.3
RWS Holdings plc: Condensed Consolidated Statement of Cash Flows
6 months ended 31 March 2025 6 months ended 31 March 2024
(Unaudited) (Unaudited)
Note £ £
Cash flows from operating activities
(Loss)/profit before tax (12.7) 17.3
Adjustments for:
Depreciation of property, plant and equipment 2.1 4.5
Amortisation of right-of-use assets 3.4 3.5
Amortisation of intangible assets 33.5 29.6
Amortisation of debt issue costs 0.3 0.4
Share-based payment expense 1.6 1.7
Finance (income) (0.5) (1.0)
Finance expense 3.0 3.5
Fair value movement on derivatives 1.6 (1.5)
Operating cash flow before movements in working capital 32.3 58.0
Decrease/(increase) in trade and other receivables 2.3 (19.7)
Decrease in trade and other payables 11.7 9.7
Cash generated from operating activities 46.3 48.0
Income tax paid (9.1) (10.6)
Net cash inflow from operating activities 37.2 37.4
Cash flows from investing activities
Interest received 0.5 1.0
Disposal proceeds 5.0 -
Acquisition of subsidiary, net of cash acquired - (0.5)
Purchases of property, plant and equipment (1.5) (2.4)
Purchases of intangibles assets (10.3) (21.6)
Net cash outflow from investing activities (6.3) (23.5)
Cash flows from financing activities
Net movement on existing debt 21.8 50.9
Interest paid (3.0) (3.5)
Lease liability payments (5.3) (5.0)
Purchase of own shares - (30.4)
Dividends paid 6 (36.9) (36.4)
Net cash outflow from financing activities (23.4) (24.4)
Net increase/(decrease) in cash and cash equivalents 7.5 (10.5)
Cash and cash equivalents at beginning of the period 61.5 76.2
Exchange gains/(losses) on cash and cash equivalents 0.5 (1.1)
Cash and cash equivalents at the end of the period 8 69.5 64.6
Notes to the Condensed Consolidated Financial Statements
1 Basis of preparation
General information
RWS Holdings plc, together with its subsidiaries, is a content solutions
company, powered by technology and human expertise. We grow the value of
ideas, data and content by making sure organizations are understood.
Everywhere.
RWS Holdings plc is a public limited company incorporated under the Companies
Act 2006 and domiciled in England and Wales and its shares are quoted on the
AIM Market.
This condensed consolidated interim financial report does not constitute
statutory accounts within the meaning of Section 434 of the Companies Act
2006. The statutory accounts of RWS Holdings plc in respect of the year ended
30 September 2024 have been delivered to the Registrar of Companies, upon
which the Company's auditors have given a report which was unqualified and did
not contain any statement under Section 498 of the Companies Act 2006
The condensed consolidated interim financial report for the six months ended
31 March 2025 were approved by the Directors on 16 June 2025.
Basis of preparation
The condensed consolidated interim financial report is for the six months
ended 31 March 2025. It is unaudited and prepared in accordance with the AIM
rules for Companies and with IAS 34, 'Interim Financial Reporting'. The
condensed consolidated interim financial report should be read in conjunction
with the annual financial statements for the year ended 30 September 2024.
which have been prepared in accordance with international accounting standards
and in conformity with the requirements of the Companies Act 2006
Accounting policies
The accounting policies adopted in the preparation of the condensed
consolidated interim financial statements are consistent with those of the
Group's annual financial statements for the year ended 30 September 2024.
Amended standards adopted by the group
The IASB has issued the following amendments, which have been endorsed by the
UK Endorsement Board, for annual periods beginning on or after 1st January
2024
- Amendments to IAS 7 Statement of Cash Flows;
- Amendments to IFRS7 Financial Instruments: Disclosure relating
Supplier Finance Arrangements;
- Amendments to IFRS 16 Leases;
- Amendments to IAS 1 Presentation of Financial Statements.
The new or amended standards and interpretations above are effective for the
year ended 30 September 2025. The directors anticipate that the adoption of
these standards and interpretations will have no material impact on the
Group's financial statements. The Group has not early adopted any standard,
amendment or interpretation that was issued but is not yet effective.
Going concern
At 31 March 2025, the Group's balance sheet reflects a net asset position of
£869.9m and the liquidity of the Group remains strong with £69.5m of cash
and cash equivalents. The Group has a $220m Revolving Credit Facility (RCF)
maturing on 3 August 2027. At the period end, £72.2m of this RCF is undrawn.
At 31 March 2025, the Group is in a net debt position excluding lease
liabilities of £27.0 (see note 9), and the Group's two debt covenants under
its RCF, being the ratio of Net Debt to trailing 12- month adjusted EBITDA (as
defined in the RCF agreement) and trailing 12-month EBITDA to Finance Charges
(as defined in the RCF agreement) are both well within the covenant limits
permitted by the Group's RCF.
On the basis set out above, the Directors consider it appropriate to conclude
that the Group has adequate resources to continue as a going concern for the
foreseeable future and for a period of at least 12 months from the date of
authorising these interim financial statements. Therefore, the Group continues
to adopt the going concern basis for preparing its interim financial
statements.
Principal risks and uncertainties
The Board routinely monitors risks that could materially and adversely affect
the Group's ability to achieve strategic goals, its financial condition and
the results of its operations. The Group's risk management framework is
explained from page 42 of our 2024 Annual Report and Financial Statements
which is available on our website at www.rws.com (http://www.rws.com/) .
(http://www.rws.com/) The Board assumes overall accountability for the
management of risk whilst the Audit Committee continues to monitor and review
the effectiveness of the Group's risk management and internal control systems.
The identified principal risks are considered unchanged from those outlined on
pages 42 to 45 of our 2024 Annual Report and Financial Statements. These are
technology and AI, competitive risk, talent retention and development, failure
to deliver profitable growth, data services business model risk, data privacy,
cyber security, complexity and business transformation, legislative and
regulatory compliance and geopolitical changes.
Judgements and estimates
The preparation of these condensed consolidated interim financial statements
requires management to exercise judgement in applying the Group's accounting
policies. It also requires the use of estimates and assumptions that affect
the reported amounts of assets, liabilities, income and expenses. The actual
future outcomes may differ from these estimates and give rise to material
adjustments to the reported results and financial position of the Group.
Estimates and underlying assumptions are reviewed on an ongoing basis, with
revisions recognised in the year in which the estimates are revised and in any
future periods affected. The Group's significant estimates and judgements are
described in note 2 of the 2024 Annual Report and Financial Statements and
summarised below:
Areas of estimation and uncertainty:
• Value in use estimation for the Group's Cash Generating Units
("CGUs")
• Interpretation of applicable tax legislation, including transfer
pricing, timing of future taxable income which could necessitate future
adjustments to taxation already recorded, and the recoverability of the
Group's resulting deferred tax assets.
• Estimates of cost to complete for the rendering of services
delivered on an 'over time' basis and by extension the associated accrued
income.
Significant areas of judgement:
• Revenue - multiple arrangements. To determine the appropriate revenue
recognition for contracts containing multi-elements that include both products
and services, we evaluate whether the contract should be accounted for as a
single, or multiple performance obligations.
• Capitalised development costs. Management applies judgement in
determining if the costs meet the criteria under IAS 38, Intangible Assets and
are therefore eligible for capitalisation.
2 Revenue from contracts with customers and segment information
The Group generates revenue from contracts with its customers for the
provision of translation and localisation, intellectual property support
solutions and the provision of software. Revenue from providing these services
during the year is recognised either at a point in time and over time as shown
in the table below.
Timing of revenue recognition for contracts with customers
6 months ended 6 months
31 March 2025 (Unaudited) ended
£m 31 March 2024 (Unaudited)
£m
At a point in time 23.8 26.4
Over time 320.5 323.9
Total revenue from contracts with customers 344.3 350.3
Segmental reporting
The chief operating decision maker for the Group is identified as the Group's
Board of Directors collectively. The Board reviews the Group's internal
reporting in order to assess performance and allocates resources. The Board
divides the Group into four reportable segments and assesses the performance
of each segment based on the revenue and adjusted profit before tax. These are
measured on a basis consistent with the Condensed Consolidated Statement of
Comprehensive Income.
The four reporting segments, which match the operating segments, are explained
in more detail below:
• Language and Content Technology ("L&CT"): Revenue is generated
through the provision of a range of translation technologies and content
platforms to clients.
• IP Services: The Group's IP Services segment provides high quality
patent translations, filing services and a broad range of intellectual
property ("IP") search services.
• Language Services: The revenues are derived by providing localisation
services which include translation and adaptation of content across a variety
of media and materials to ensure brand consistency.
• Regulated Industries: Revenue is generated through the translation
and linguistic validation for customers who operate in regulated industries
such as life sciences.
Unallocated costs reflect corporate overheads and other expenses not directly
attributed to segments.
Segment results for the 6 months
ended 31 March 2025 (Unaudited)
IP Services
Language Services Regulated Industries £m Unallocated
£m £m L&CT £m Group
£m £m
Revenue 158.4 65.6 71.2 49.1 - 344.3
Operating profit/(loss) before charging: 6.4 2.7 8.5 10.5 (7.4) 20.7
Amortisation of acquired intangibles (7.0) (6.0) (8.6) - - (21.6)
Exceptional items - acquisition- - - - - (2.8) (2.8)
related costs
Share-based payments expenses - - - - (1.6) (1.6)
Exceptional items - other - - - - (4.7) (4.7)
Operating (loss)/profit (0.6) (3.3) (0.1) 10.5 (16.5) (10.0)
Finance expense (2.7)
(Loss) before taxation (12.7)
Tax credit 1.4
(Loss) for the period (11.3)
Segment results for the 6 months
ended 31 March 2024 (Unaudited)
IP Services
Language Services Regulated Industries £m Unallocated
£m L&CT £m Group
£m £m
Revenue 156.5 71.8 68.8 53.2 - 350.3
Operating profit/(loss) before charging: 15.3 7.5 12.8 14.2 (1.7) 48.1
Amortisation of acquired intangibles (7.1) (6.0) (8.4) - - (21.5)
Exceptional items - acquisition-related costs - - - - (4.3) (4.3)
Share-based payments expenses - - - - (1.7) (1.7)
Exceptional items - other - - - - (0.8) (0.8)
Operating profit/(loss) 8.2 1.5 4.4 14.2 (8.5) 19.8
Finance expense (2.5)
Profit before taxation 17.3
Tax charge (6.2)
Profit for the period 11.1
Capitalised contract costs, contract asset and contract liabilities
The Group has capitalised contract costs as incremental expenses under IFRS
15, mainly for commissions on new contracts. The balance at the balance sheet
date was £1.3m (HY24: £1.5m).
Contract assets and liabilities are recognised at the point in which the
Group's right to consideration is unconditional. The Group uses the term
'Trade Receivables' for these financial asset balances. Contract assets are
recognised where performance obligations are satisfied over time until the
point of final invoicing when these are classified as 'Trade Receivables'. The
Group recognises revenue for partially satisfied performance obligations as
'Accrued Income', below is a summary of contract balances held by the Group:
31 March 2025 31 March 2024
(Unaudited) (Unaudited)
£m £m
Net trade receivables 119.8 138.2
Net contract assets (accrued income) 62.8 52.9
Total contract assets 182.6 191.1
Contract liabilities (deferred income) 47.7 51.8
Total contract liabilities 47.7 51.8
3 Net finance costs
6 months 6 months
ended ended
31 March 2025 31 March 2024
(Unaudited) (Unaudited)
£m £m
Net finance costs
- Net bank interest payable 2.0 1.5
- Interest payable on lease obligations 0.5 0.6
- Amortised borrowing costs 0.2 0.4
Net finance costs 2.7 2.5
4 Exceptional items
Exceptional items are items of financial significance which the Group believes
should be separately identified on the face of the income statement to assist
in understanding the underlying financial performance achieved by the Group.
6 months 6 months
ended ended
31 March 2025 31 March 2024
(Unaudited) (Unaudited)
£m £m
Acquisition-related costs 2.8 4.3
Other exceptional items 4.7 0.8
Total exceptional items 7.5 5.1
Other exceptional items
A description of the principal items included is provided below:
Restructuring costs - £4.6m was incurred in respect of business
restructuring.
Finance costs - £0.1m was incurred related to amortisation expense associated
with a gain on debt modification recognised in previous accounting periods.
In HY24, other exceptional costs of £0.8m is made up of severance costs of
£0.4m, finance cost amortisation of £0.1m, restructuring costs of £0.2m and
£0.1m spent to establishing a new holding company.
Acquisition-related costs
Acquisition-related costs of £2.8m (HY24: £4.3m) includes £2.7m of
contingent consideration associated with the acquisition of Propylon being
recognised in accordance with IFRS 3 and a further £0.1m of contingent
consideration associated with the acquisition of ST Comms Language Specialists
Proprietary Limited being recognised in accordance with IFRS 3. These have
been accounted for as exceptional items in line with the Group's accounting
policy and treatment of similar costs during the year ended 30 September
2024.
In the prior period, acquisition-related costs consist of £1.1m of contingent
consideration associated with the acquisition of Liones Holding BV ("Fonto")
being recognised in accordance with IFRS 3, £2.9m of contingent consideration
associated with the acquisition of Propylon being recognised in accordance
with IFRS 3, £0.2m of contingent consideration associated with the
acquisition of ST Comms Language Specialists Proprietary Limited being
recognised in accordance with IFRS 3, and £0.1m in respect of on-going
strategic projects.
5 Taxation
6 months 6 months
ended ended
31 March 2025 31 March 2024
(Unaudited) (Unaudited)
£m £m
Total current taxation 4.9 10.3
Deferred taxation (6.3) (4.1)
Tax (credit)/expense (1.4) 6.2
Effective tax rate
The effective tax rate on reported profit before tax was 11.0% (HY24: 35.8%).
The Group's effective tax rate on the tax credit for the period is lower than
the UK's statutory tax rate mainly due to non-tax deductibility of acquisition
related exceptional costs, which reduced the reported tax credit.
The adjusted tax charge was £4.6m (HY24: £11.4m) giving an adjusted
effective tax rate of 25.6% (HY24: 25.1%) on adjusted profit before tax of
£18.0m (HY24: £45.6m). Adjusted profit before tax is an adjusted measure
which, is reconciled as part of the Alternative Performance Measures section
at the end of this report.
The adjusted tax charge is the total tax charge as disclosed in the Condensed
Consolidated Income Statement less the tax effects of exceptional items and
amortisation of acquired intangibles. The effective income tax rate represents
the best estimate of the average annual effective income tax rate expected for
the full year, applied to the profit before income tax for the six months
ended 31 March 2025 adjusted for discrete items as required.
The Group's adjusted effective tax rate going forward is expected to be in the
region of 25% to 26%, similar to the effective UK rate. There are some
countries in which the tax rate is lower than the UK, but the impact is
largely offset by the tax rates in countries that are higher than the UK.
Uncertain tax provisions
The Group holds uncertain tax provisions in relation to historic transfer
pricing arrangements between the UK, Ireland, the US as well as other tax
risks across the Group. These provisions total £6.4m at 31 March 2024 (HY23:
£6.2m).
6 Dividends
An interim dividend of 2.45p (HY24: 2.45p) per ordinary share will be paid on
18 July 2025 to shareholders on the register at 19 June 2025. The ex-dividend
date is 20 June 2025.
This dividend, declared by the Directors after the balance sheet date, has not
been recognised in these financial statements as a liability at 31 March 2025.
The interim dividend will reduce shareholders' funds by an estimated £9m
(HY24: £9.0m).
Dividends paid in the period were £36.9m (HY24: £36.4m).
7 Earnings per share
Basic earnings per share is calculated by dividing the Group's profit after
tax by the weighted average number of ordinary shares in issue during the
period.
Diluted earnings per share is calculated by adjusting the basic earnings per
share for the effects of share options and awards granted to employees. These
are included in the calculation when their effects are dilutive.
Adjusted earnings per share is a trend measure, which presents the long-term
profitability of the Group, excluding the impact of specific transactions that
management considers affects the Group's short-term profitability. The Group
presents this measure to assist investors in their understanding of trends.
Adjusted profit after tax is the numerator used for this measure. Adjusted
earnings and adjusted earnings per share are therefore stated before
amortisation of acquired intangibles, acquisition costs, share based payment
expenses and exceptional items.
6 months ended 6 months ended
31 March 2025 31 March 2024
Earnings per ordinary share - basic (p) (3.1) 3.0
Earnings per ordinary share - diluted (p) (3.1) 3.0
Adjusted earnings per ordinary share - basic (p) 3.6 9.1
Adjusted earnings per ordinary share - diluted (p) 3.6 9.1
6 months ended
6 months ended 31 March 2024
31 March 2025 Earnings
Earnings £m
£m
(11.3) 11.1
Profit for the period
Adjustments: 21.6 21.5
Amortisation of acquired intangibles
Share-based payment expenses 1.6 1.7
Exceptional items 7.5 5.1
Tax effect of adjustments (6.0) (5.5)
Tax adjustment in respect of prior years - 0.2
Adjusted profit attributable to equity holders of the parent 13.4 34.1
6 months ended 31 March 2024
6 months ended
31 March 2025
369,115,317
Weighted average number of ordinary shares in issue for basic earnings 374,012,554
Dilutive impact of share options - -
Weighted average number of ordinary shares for diluted earnings 369,115,317 374,012,554
8 Cash and cash equivalents
31 March 31 March 30 September 2023
2025 2024 (Audited)
(Unaudited) (Unaudited) £m
£m £m
Cash at bank and in hand 58.8 52.2 52.4
Short-term deposits 10.7 12.4 9.1
Cash and cash equivalents in the cash flow statement 69.5 64.6 61.5
Short-term deposits include deposits with a maturity of three months or less,
or deposits that can be readily converted into cash. The fair value of these
assets supports their carrying value.
9 Analysis of net debt
1 October 2024 Effects of Non-cash movements
£m cash flows £m 31 March 2025
£m (Unaudited) £m
Cash & cash equivalents 61.5 7.5 0.5 69.5
Issue costs 1.6 - (0.3) 1.3
Loans (current and non-current) (76.0) (21.8) - (97.8)
Net debt (excluding lease liabilities) (12.9) (14.3) 0.2 (27.0)
Lease liabilities (27.2) 5.3 (1.7) (23.6)
Net debt (including lease liabilities) (40.1) (9.0) (1.5) (50.6)
At 31 March 2025, the Group is in a net debt position, excluding lease
liabilities, of £27.0m and the Group's two debt covenants under its RCF being
the net leverage ratio and interest coverage ratio are both are well within
the covenant limits permitted by the Group's RCF.
10 Share-based compensation grants
On 24 January 2025, 6,059,183 Long Term Incentive Plan ("LTIP") share options
were awarded to certain key senior executives and employees of the Group.
The LTIPs comprise conditional awards of shares, with performance conditions
measured in 2028 by reference to performance in the period from 2 December
2024 to 23 January 2028, based on total shareholder return ('TSR').
On 24 January 2025, a restricted share award (RSA) of 1,338,401 LTIP shares
were awarded to certain key senior executives and employees of the Group.
This RSA comprised conditional awards of shares, with performance conditions
measured in 2026 by reference to performance in the period from 24 January
2025 to 23 January 2026, based on personal performance targets.
On 24 January 2025, a bonus share award of 81,300 shares was awarded to the
CFO, these shares vested on 24 January 2025.
On 13 February 2025, 607,816 share options were granted under the Group's SAYE
scheme, which in normal circumstances will not be exercisable until the
completion of a three-year savings period ending on 31 March 2028 and will be
exercisable for a period of six months thereafter.
11 Related party transactions
During the first half, in the normal course of business, the Group provided
translation services worth £216k (HY24: £202k) to subsidiaries of Learning
Technologies Group plc (LTG), a company in which Andrew Brode, the Group's
Chairman, has a significant interest. £134k (HY24: £176k) was due from LTG
at the reporting date.
12 Financial risk management and financial instruments
The Group's operations expose it to a variety of financial risks including
foreign currency risk, credit risk, liquidity risk and interest rate risk. The
Group's treasury policy addresses issues of liquidity, funding and investment
as well as currency, credit, liquidity and interest rate risks. The condensed
consolidated interim financial statements do not include all the financial
risk management information and disclosures required in the annual financial
statements. This information and related disclosures are presented in the
Group's annual financial statements at 30 September 2024.
There have been no significant changes to risk management policies or
processes since the year end.
The Group holds a number of financial instruments that are held at fair value
within the condensed consolidated interim financial statements. In deriving
the fair value the derivative financial instruments are classified as level 1,
level 2, or level 3 dependent on the valuation method applied in determining
their fair value.
The different levels are defined as follows:
Level
1 Quoted prices (unadjusted) in active markets for identical assets or
liabilities
2 Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (prices) or indirectly
(derived from prices)
3 Inputs for the assets and liabilities that are not based on
observable market data (unobservable inputs)
The financial instruments held at fair value by the Group relate to foreign
currency forward contracts used as derivatives for hedging. For both the six
months ended 31 March 2025 and 31 March 2024, the assets and liabilities
arising from foreign currency forward contracts have been classified as level
2. The fair value of these instruments at each of the period ends was:
31 March 31 March 30 September
2025 (Unaudited) 2024 (Unaudited) £m 2024
£m (Audited)
£m
Assets
Forward foreign currency exchange contracts - 1.6 -
Liabilities
Forward foreign currency exchange contracts (1.6) - -
There have been no transfers between level 1 and 2 in any period and there are
no level 3 items. The fair value of other financial assets and liabilities,
including trade and other receivables, cash and cash equivalents, trade and
other payables and borrowings approximate to their carrying amount.
13 Post Balance Sheet events
The group has no post balance sheet events to disclose.
Appendix
Alternative performance measures
The Board uses a number of alternative performance measures, which can be
directly reconciled to GAAP measures. The Board primarily uses these
'adjusted' measures as they exclude the impact of non-recurring transactions
which are not part of the normal course of business. Adjusted measures
therefore are calculated by removing the impact of exceptional items,
share-based payment expenses and amortisation of acquired intangibles
together, where relevant, with their associated tax effects.
Adjusted measures used by the Board include:
• Adjusted profit before tax: Profit before tax before exceptional
items, share-based payment expenses and amortisation of acquired intangibles
(reconciled on the face of the income statement).
• Adjusted profit after tax: profit after tax before exceptional
items, share-based payment expenses and amortisation of acquired intangibles
(reconciled in note 7 as the numerator for adjusted EPS and adjusted diluted
EPS).
• Cash conversion: free cash flow before exceptional cashflows,
divided by adjusted net income.
• Free cash flow, before exceptional cash flows: net cash inflow
from operating activities before exceptional cash flows, less purchase of
fixed assets, net interest paid and lease liability payments (reconciled
below).
• Adjusted effective tax rate: effective tax rate before exceptional
items, amortisation of acquired intangibles, tax on exceptional items and
prior year adjustments (reconciled below).
• Adjusted earnings per share: earnings per share before exceptional
items net of tax, share-based payment expenses, amortisation of acquired
intangibles net of tax and exceptional tax amounts (reconciled in note 7).
• Constant currency: Prior period underlying measures, including
revenue are retranslated at the current period exchange rates to neutralise
the effect of currency fluctuations.
Adjusted profit before tax reconciliation HY25 HY24
£m £m
Statutory profit before tax (12.7) 17.3
Exceptional items - acquisition-related costs 2.8 4.3
Exceptional items - other 4.7 0.8
Share-based payments expense 1.6 1.7
Amortisation of acquired intangibles 21.6 21.5
Adjusted profit before tax 18.0 45.6
Free Cash Flow reconciliation HY25 HY24
£m £m
Net cash inflow from operating activities 37.2 37.4
Exceptional cash flows 5.3 4.3
Purchases of property, plant and equipment and intangible assets (11.8) (24.0)
Net interest paid (2.5) (2.5)
Lease liability payments (5.3) (5.0)
Free cash flow 22.9 10.2
Operating cash conversion reconciliation HY25 HY24
£m £m
Adjusted net income 13.4 34.1
Free cash flow 22.9 10.2
Operating cash conversion 171% 30%
HY25 HY24
Adjusted effective tax rate £m £m
Tax (credit)/charge (1.4) 6.2
Tax on amortisation of acquired intangibles 4.8 5.1
Tax on exceptional items 1.0 0.3
Tax on share-based payments 0.2 -
Prior Year Adjustments - (0.2)
Adjusted tax charge 4.6 11.4
Adjusted profit before tax 18.0 45.6
Adjusted effective tax rate 25.6% 25.1%
KPIs
KPIs are those key performance indicators used by management and the Board to
monitor the success of the Group. These differ from the Group's alternative
performance measures as they are measures that cannot necessarily be
calculated from GAAP measures.
The KPIs, reviewed by the Board include revenue growth, gross margin and free
cash flow. Free cash flow is defined as cash generated from operations after
interest and tax costs, maintenance capital expenditure and capitalised
research and development costs. Maintenance capital expenditure is the
recurring level of capital expenditure required for the business in its
current form to operate in medium term and excludes non-recurring investment
in capitalised system and infrastructure costs.
Net cash comprises cash and cash equivalents and external borrowings. Net cash
excludes lease liabilities but is reconciled to a measure including lease
liabilities in note 9.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END IR PKABQCBKDAADRecent news on RWS Holdings
See all newsREG - RWS Holdings PLC Jupiter Fund Mgmt - Holding(s) in Company
AnnouncementREG - RWS Holdings PLC - Holding(s) in Company
AnnouncementREG - RWS Holdings PLC - Further re Half Year Report
AnnouncementREG - RWS Holdings PLC - Half-year Report
AnnouncementREG - RWS Holdings PLC - Holding(s) in Company
Announcement