REG - RWS Holdings PLC - Trading Statement

RWS HoldingsAnnouncement

25/10/2023 07:00

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RNS Number : 1705R  RWS Holdings PLC  25 October 2023

 

 

For immediate
release
25 October 2023

 

RWS Holdings plc

 

Year End Trading Statement and Notice of Results

 

Encouraging progress with growth initiatives, new client wins and continued
strong cash generation

 

RWS Holdings plc ("RWS" or "the Group"), a unique world-leading provider of
technology-enabled language, content and intellectual property services, today
provides an update on trading for the year ended 30 September 2023 ("FY23")
ahead of the announcement of its preliminary results on 12 December 2023.

FY23 Performance

The Group expects to report adjusted profit before tax within the range of
market expectations(1). This reflects the previously announced management
initiatives to improve efficiency and maintain profitability, together with
the benefits of our foreign exchange hedging programme. This is despite
reported revenue for the year declining by c.2% (c.6% decline in organic
constant currency ("OCC")²) as a result of a continuing challenging market
environment. As anticipated, the OCC revenue decline has slowed from c.7% in
the first half to c.5% in the second half, with improving trends across our
services divisions.

We saw continued progress in our growth initiatives, notably with TrainAI (our
data services proposition) and eLearning in Language Services, Linguistic
Validation in Regulated Industries and the Patent Attorney focus in IP
Services. We made some progress in our pricing programme, particularly in the
Language and Content Technology Division ("L&CT"), and we have continued
to win new clients and see high levels of client retention and satisfaction
scores through the year. As illustrated in our AI and Technology Teach-In
earlier this month, we believe that developments in AI have been positive for
RWS and will continue to support our growth and efficiency in FY24 and beyond.

Delivery of the significant cost actions announced in June is nearly complete
and we continue to identify further opportunities for efficiency gains through
our transformation programmes, including by increasing the proportion of work
undertaken through our Language eXperience Delivery ("LXD") platform and the
use of AI internally.

In July we completed the acquisition of Propylon, a content management
technology business headquartered in Dublin, Ireland. Propylon's component
content management system is used by governments, standards bodies, legal
publishers and regulated firms to address the complexities involved with
drafting, managing, publishing and updating legal and legislative content.
Shortly after the end of FY23 we announced the acquisition of ST
Communications, a long-term language partner of RWS, which has given us a
presence in Africa and access to significant expertise in more than 40 African
languages. Integration of both businesses has started well and is proceeding
to plan.

Cash generation remains strong and the Group had net cash³ of c.£23m at the
end of September 2023 (FY22: £72m) after £30.8m of acquisition costs
(initial consideration for Propylon and deferred consideration for Fonto), as
well as £46.3m in dividends and £19.4m on share repurchases. In line with
our capital allocation policy, the share repurchase programme, announced with
our half year results, is progressing as planned.

Divisional overview

In L&CT we have had some encouraging new client wins, with Language Weaver
continuing to make good progress with strong second half bookings, including
its largest ever Cloud SaaS contract, worth more than a million dollars over
three years. Overall, SaaS revenues as a proportion of annual technology
licences revenue continues to grow. While this has a negative impact on
organic growth in the short-term, the cumulative benefit from this transition
over recent years will deliver, as intended, a more predictable revenue
profile for the division.

In Language Services client retention and satisfaction remained high and we
were encouraged by positive outcomes following tender processes with several
of our global technology clients, albeit we continued to see reduced activity
from some clients as they adjusted to more challenging conditions in their own
markets. The TrainAI and eLearning growth initiatives both performed well and
provide momentum as we start FY24.

Regulated Industries continued to make positive progress in Linguistic
Validation (services delivered at the clinical stage of therapy development)
and while some Life Sciences clients continued to deliver reduced levels of
activity at the regulatory stage, we expect volumes to increase as more
products move through to the regulatory approval and launch stages in due
course. The Financial and Legal Services segment performed well, driven by
clients ensuring compliance with PRIIPS regulations.

In IP Services the launch of the Unitary Patent on 1 June resulted in the
release of some of the backlog of IP work, with volumes in the second half
recovering as previously expected.

Notice of Full Year Results

RWS will provide a further update with its full year results on 12 December
2023. To register your interest in attending the results presentation, please
email RWS@mhpgroup.com.

 

Ian El-Mokadem, CEO of RWS, commented:

"We have continued to make positive progress with our medium-term strategy in
the second half of the year, including our growth initiatives, pricing,
transformation programmes and expanding our portfolio. This progress has
helped to mitigate some of the effects of a challenging macroeconomic
environment which has resulted in reduced activity in a number of our end
markets. While we have taken action to ensure that our cost base matches
current levels of activity, we remain confident that activity levels will
recover in due course.

 

"We have also made good progress with regard to AI and technology, building on
our longstanding expertise and capability, as demonstrated at our recent AI
and Technology Teach-In. With an increase in bookings for Language Weaver,
revenue growth in TrainAI and the incorporation of AI features into our Trados
product, we believe that we have the range of AI-enabled solutions with the
enterprise-grade security, quality, and privacy that clients are actively
seeking. Internally, we have also continued to enhance the use of AI in our
production platform, the LXD.

 

"Despite the ongoing challenges in our some of our markets, we are
successfully pivoting into higher growth segments, continuing to invest to
develop our AI-centred technology solutions, building on our strong
acquisition track record and transforming the Group into a scalable platform
which will support organic and inorganic growth. With our strong balance sheet
and cash generation, global scale and reach and unique combination of
market-leading expertise and technology, we remain confident about the Group's
long-term prospects."

 

1.     The latest Group-compiled view of analysts' expectations for FY
2023 gives a range of £738.1m-£757.4m for revenue, with a consensus of
£748.8m and £116.5m-£129.0m for adjusted profit before tax, with a
consensus of £125.8m.

2.     OCC excludes the impact of acquisitions and assumes constant
currency.

3.     Net cash comprises cash and cash equivalents less loans but before
deducting lease liabilities.

 

For further information, please contact:

 RWS Holdings plc

 Ian El-Mokadem, Chief Executive Officer

 Candida Davies, Chief Financial Officer                01753 480200

 MHP (Financial PR advisor)                             rws@mhpgroup.com

 Katie Hunt / Eleni Menikou / Catherine Chapman         020 3128 8100

                                                        07884 494112

 Numis (Nomad & Joint Broker)

 Stuart Skinner / Kevin Cruickshank / Will Baunton      020 7260 1000

 Berenberg (Joint Broker)

 Ben Wright / Toby Flaux / Alix Mecklenburg-Solodkoff   020 3207 7800

 

 

 

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 combination of AI-enabled
technology and human expertise helps our clients to grow by ensuring they are
understood anywhere, in any language.

 

Our purpose is unlocking global understanding. By combining cultural
understanding, client understanding and technical understanding, our services
and technology assist our clients to acquire and retain customers, deliver
engaging user experiences, maintain compliance and gain actionable insights
into their data and content.

 

Over the past 20 years we've been evolving our own AI solutions as well as
helping clients to explore, build and use multilingual AI applications. With
40+ AI-related patents and more than 100 peer-reviewed papers, we have the
experience and expertise to support clients on their AI journey.

 

We work with over 80% of the world's top 100 brands, more than three-quarters
of Fortune's 20 'Most Admired Companies' and almost all of the top
pharmaceutical companies, investment banks, law firms and patent filers. Our
client base spans Europe, Asia Pacific, Africa and North and South America.
Our 65+ global locations across five continents service clients in the
automotive, chemical, financial, legal, medical, pharmaceutical, technology
and telecommunications sectors.

 

Founded in 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: www.rws.com (http://www.rws.com) .

 

 

 

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