REG - RWS Holdings PLC - Trading Statement

RWS HoldingsAnnouncement

24/04/2025 07:02

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RNS Number : 9447F  RWS Holdings PLC  24 April 2025

This announcement contains inside information.

 

For immediate
release
                    24 April 2025

 

RWS Holdings plc

Half Year Trading Statement

 

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 six months ended 31 March
2025 ("HY25") ahead of the announcement of its half year results on 17 June
2025.

Group Performance

The Group delivered 1.3% organic constant currency ("OCC")¹ revenue growth in
the period (H1 FY24: -2%), consolidating the return to growth seen in H2 FY24.
Reported revenue is expected to be approximately £344m, a 1.8% decline versus
prior year. Three out of the four divisions grew in the period and we were
particularly pleased to see the continued momentum in our software products
division, Language & Content Technology ("L&CT") and good progress
with our AI-led products and services, providing further evidence of our
planned pivot to growth focus areas.

Client retention levels remain high and we secured new logos across all
divisions and in a wide range of end markets, including automotive,
e-commerce, financial services, legal, media and technology. We saw strong
performances in TrainAI and Language Weaver and trading in APAC was strong
throughout the Group, reflecting the opportunity we see in the region. In our
customer satisfaction programme, our NPS score was +51 for the rolling 12
months to 31 March 2025, our highest ever.

While we have also seen encouraging volumes in language services, we have
continued to experience challenges in relation to mix across the Group, driven
by weaker performance in the life sciences segment of Regulated Industries,
and initial transition costs as clients are onboarded onto new automated
delivery models.

Adjusted profit before tax ("PBT") performance in the first half has been
impacted by several non-trading items, including foreign exchange, increased
amortisation and the impact of the sale of PatBase (all as previously guided)
and an increase in the proportion of technology investment being expensed in
the year.

 

Consequently, the Group expects to deliver adjusted PBT of approximately £17m
in the first half (H1 FY24: £46m). The non-trading items account for the
majority (£23m) of the decline versus prior year, with the balance due to the
gross profit impact of the mix changes noted above.

 

Cash generation continues to be strong and the Group had a modest net debt²
position of c.£27m at 31 March 2025, after payment during the first half of
the £37m final dividend for FY24.

 

Divisional Performance

Language Services grew on an OCC¹ basis, with a particularly strong
performance in APAC and in TrainAI, our data services solution. We have
continued to deliver on the significant TrainAI programmes of work we won in
FY24 with some of our west coast technology clients and secured our first
piece of TrainAI work with another global technology player in the first
quarter of FY25.

In the first half we saw specific challenges with two large clients in
relation to changes to delivery models  and content types. Workflow and
automation improvements successfully addressed the initial gross margin impact
of this in March for one of these clients and a solution for the other will be
implemented during the third quarter.

L&CT had a strong first half, with OCC¹ growth driven principally by
Propylon and Language Weaver. The performance improvement of the content
technology segment in H2 FY24 was maintained in H1 FY25 and we saw further
progress in delivering a higher proportion of SaaS licences across the
division, as planned.

In IP Services, growth in the renewals segment underpinned the division's
positive OCC¹ performance, with a strong second quarter giving confidence for
the second half. The APAC region performed well, as did the Worldfile segment.

Regulated Industries revenue declined on an OCC¹ basis, driven by delays in
some client work programmes, further impacted by significant change in our
sales and management team, as we refresh our go-to-market approach.

Full Year Outlook

While we continue to be mindful of the challenging macroeconomic backdrop, we
expect to deliver modest single digit OCC¹ growth for the full year in line
with previous guidance. We are encouraged by some performance improvement as
we exited the first half and anticipate accelerated organic growth through the
second half. We will also see the full benefits of those cost reduction
programmes already being delivered and we will continue to invest in more
automation to increase our efficiency.

Our updated view of the level of capitalisation of our technology investments
will result in an increase in overheads of approximately £8m in FY25, with a
corresponding reduction in capital expenditure. While we anticipate an
improvement in gross margin in the second half, we expect the full year gross
margin impact from mix changes to be around 300 bps. As a result, adjusted PBT
is now expected to be in the range of £60m-70m for FY25, based on an H2 GBP /
USD FX rate of 1.33.

 

Ben Faes, CEO of RWS, commented:

"The Group's first half results reflect our strong focus on organic revenue
performance, with OCC¹ growth in three of the four divisions. We are
particularly encouraged by the growth that we have seen in the APAC region,
with new logo wins and retentions with several globally-recognised brands, a
strong performance from L&CT and a solid end to the first half seen in
Language Services and IP Services.

"Our AI-focused solutions continue to gain traction with clients and we expect
the Group's growth momentum to accelerate through the second half, giving
confidence in the delivery of OCC¹ growth expectations for the full year.

"Whilst changes in our mix of work and to new delivery models for certain
clients have impacted profitability during this transition phase, we are
confident that the actions we are taking to drive efficiency, agility and
automation across the Group will support sustained profitability as we capture
the higher volume growth anticipated in our markets.

"We therefore continue to invest to deliver future growth and improved
performance. Central to this is an improved go-to-market approach and a
clearer articulation of the value that we bring to our clients' content, data
and ideas, underpinned by a more flexible and efficient delivery platform. I
look forward to updating you on RWS's refreshed strategy when we present our
HY25 results on 17 June."

 

Notes:

¹  Adjusted to reflect a like-for-like comparison between reporting periods
and assumes constant currency across both reporting periods.

² Net cash/net debt comprises cash and cash equivalents less loans but before
deducting lease liabilities.

 

For further information, please contact:

 RWS Holdings plc

 Ben Faes, Chief Executive Officer                     01628 410100

 Candida Davies, Chief Financial Officer

 MHP (Financial PR adviser)                           rws@mhpgroup.com (mailto:RWS@mhpgroup.com)

 Katie Hunt / Eleni Menikou                           020 3128 8100

                                                      07884 494112
 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

The person responsible for arranging the release of this announcement on
behalf of the Company is Jane Hyde, Group General Counsel and Company
Secretary.

 

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).

 

 

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