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RNS Number : 8446H RWS Holdings PLC 11 June 2026
For immediate
release
11 June 2026
RWS Holdings plc
Half Year Report for the Six Months ended 31 March 2026
Strong organic growth and significant strategic progress underpin full year
expectations
RWS Holdings plc ("RWS", "the Group", "the Company"), a global AI solutions
company, powered by technology and human expertise, today announces its half
year results for the six months ended 31 March 2026 ("the first half", "H1
2026" or "HY26") and provides an update on strategic progress.
Financial overview
H1 2026 H1 2025 Change
Revenue £360.3m £344.3m 5%
Adjusted EBITDA¹ £45.7m £38.1m 20%
Adjusted profit before tax¹ £24.0m £18.0m 33%
Reported (loss)/profit before tax £(9.5)m £(12.7)m 25%
Adjusted basic earnings per share¹ 4.9p 3.6p 34%
Basic (loss)/earnings per share (2.0)p (3.1)p +1.1p
Interim dividend 1.75p 2.45p
Operational FCF conversion¹ 67% 92%
H1 2026 FY 2025 Change
Net debt² £(32.5)m £(25.4)m (£7.1m)
H1 2026 financial performance reflects strong organic growth, growing momentum and efficiency programme
· Strong H1 progress, with reported revenue growth of c.5% and
organic constant currency ("OCC")³ growth of c.7% in the period (HY25: +1.4%)
reflecting:
· Strategic focus on growing both the Generate and Protect segments
while continuing to invest to pivot Transform towards a technology-first
approach.
· Exceptional performance in the TrainAI business, helping a
strategic client ready a new product for launch.
· Maintained high levels of client retention and satisfaction.
· AI-related products and services increased to 32% of Group
revenue (HY25: 26%), fuelled by TrainAI growth.
· 33% increase in adjusted profit before tax ("PBT") to £24.0m
(HY25: £18.0m), supported by our ongoing efficiency programme. In line with
expected weighting across the year.
· Strong cash generation with operational free cash flow conversion
of 67% (HY25: 92%). Modest net debt² of c.£33m (HY25: £(27)m, FY25:
£(27)m) after payment of the £17m final dividend for FY25, capex (£7m) and
exceptional items (£11m).
· Interim dividend of 1.75p (HY25: 2.45p) is consistent with
rebasing of the FY25 final dividend and typical phasing across the year.
Significant progress across all three strategic pillars
· Refreshed / Go-To-Market driving results: New clients won across
all segments, in a wide range of end markets, including two TrainAI wins.
· Leading on Innovation & Technology:
· Language Weaver Pro, the world's most advanced AI translation
platform, launched in partnership with Cohere.
· Acquired Obviously Group Limited ("Obviously") in early May, a
next-generation AI-enabled platform which integrates IP and brand management,
protection and enforcement.
· Improving Efficiencies: Continue to implement plans to deliver
more scalable processes, leaner delivery systems and more optimised workflows
across the organisation.
Segment Performance
· Generate: Strong double-digit OCC³ revenue growth, with an
exceptional performance in TrainAI, driven by an additional programme with an
existing client and initial revenues from a new global technology client.
· Transform: OCC³ revenue declined, as expected, as we work
towards pivoting the segment to technology-first solutions. The segment is
positioned well for the second half with a strong sales pipeline and further
productivity improvements anticipated.
· Protect: Good OCC³ revenue growth, driven by a strong
performance in the Renewals business. Growing momentum through the second
quarter gives us confidence for the second half of the year.
Full Year Outlook
· Good start to the second half; continue to trade in line with
expectations for the full year.
· Current FX rates, after hedging, are expected to have a c.£2m
adverse impact on full year PBT, alongside the anticipated £1m in-year impact
from the Obviously acquisition which is expected to start contributing during
FY27.
· Expect mid-single-digit revenue growth on an OCC³ basis,
improving profitability, and continued strong free cash flow conversion for
the full year as we benefit from recent client wins, growth in Generate and
Protect and our efficiency programme.
Ben Faes, Chief Executive Officer of RWS, commented:
"The Group has made significant progress executing on the strategic priorities
outlined at our full-year 2025 results. This performance reflects the initial
positive effects of our new operating model and the important milestones
achieved across our three strategic growth pillars.
"In our first pillar, accelerating our go-to-market, our refreshed approach is
yielding results. We have won exciting new clients across our three segments,
including two for our TrainAI business, demonstrating clear market traction.
"In our second pillar, leading on innovation, we launched Language Weaver Pro,
a key step in providing advanced AI translation solutions, with our leadership
in this field recognised by Cohere, a leader in security-first enterprise AI
and our strategic partner. Our recent acquisition of Obviously provides us
with a unique AI-enabled platform to integrate IP and brand management. We
secured two AI-based patents, reinforcing our unique technology leadership.
"Finally, in our third pillar of improving efficiencies, we continue to
rationalise processes and scale our offshore delivery centres, which will help
drive the Group's future performance. Together, these steps are the building
blocks of our vision to be the cultural intelligence layer for enterprise AI.
"Whilst we are conscious of the geopolitical environment, we are executing
with discipline and momentum continues to build, underpinning our expectations
for a full year performance in line with guidance."
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
Stephen Lamb, Chief Financial Officer 01628 410100
MHP (Financial PR Adviser) rws@mhpgroup.com 07884 494 112 / 07701 308 818
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 global AI solutions company empowering the world's most trusted
enterprise AI.
Our proprietary Cultural Intelligence Layer, powered by 250,000 data
specialists, cultural and language experts and deep domain professionals,
backed by 45+ patents, makes enterprise AI culturally fluent, contextually
accurate and secure, ensuring every interaction reflects a brand's tone,
context and customer values.
Through our Generate, Transform and Protect segments, we deliver intelligent
content, enterprise knowledge, large-scale localisation and IP protection for
global growth. Trusted by 80+ of the world's top 100 brands, RWS provides the
confidence, governance and expertise organisations need to deploy AI safely,
responsibly and at scale.
Headquartered in the UK, RWS is listed on AIM (RWS.L).
For further information, please visit: 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 2026
Chief Executive Officer's Review
The Group has made positive progress in the first half, delivering against our
strategic objectives despite facing foreign exchange headwinds and global
uncertainty. We are pleased with our trading performance in the period, which
has seen organic constant currency ("OCC")¹ revenue growth of c.7% and
reported revenue increase by c.5% to £360.3m. This performance was powered by
our Generate and Protect segments, in line with our strategy, while we
continue the pivotal work to reposition our Transform segment.
Adjusted profit before tax ("PBT") showed strong growth to £24.0m, a
significant increase from the £18.0m reported in H1 FY25, after both currency
headwinds and a return to incurring bonus costs. Cash generation remains a key
strength, and our net debt position remained modest at c.£33m after funding
the final FY25 dividend, capital expenditure and other items.
Our Strategy: Building the Cultural Intelligence Layer for Enterprise AI
At our FY25 results, we unveiled our new strategy to accelerate growth and
position RWS as the content solutions partner of choice for enterprises. This
strategy is built on a simplified operating model organised into three
business units where we have a competitive advantage: Generate, Transform,
and Protect.
Our strategy is driven by three key growth pillars designed to drive
accelerated growth, higher quality earnings, and margin accretion in the
medium-term:
1. A new Go-To-Market strategy focused on large enterprise and
high-growth opportunities.
2. An innovation and technology roadmap to build the cultural
intelligence layer for enterprise AI at scale.
3. An efficiency plan to deliver a better, more competitive experience
for our clients.
The significant progress made in the first half demonstrates our commitment to
executing this strategy and building a technology-first business that is
central to our clients' global ambitions.
Progress against Our Strategic Growth Pillars
1. Go-To-Market: Accelerating Growth
A refreshed go-to-market approach, organised around our three segments, is
already yielding positive results. We have successfully secured new clients
across all three segments, demonstrating clear market traction for our
refocused propositions and client satisfaction remained high, with a +49 NPS
score at the end of the period (HY25: +51). A key success has been in our
TrainAI business, where we have won two significant new logos, including a new
global technology client that began generating revenue in H1, with a further
new logo win expected to contribute to H2 revenues. Our regional sales teams
are focused on bringing more of our product suite to customers, increasing our
share of wallet (109% net repeat revenue in services² (HY25: 97%)) and
acquiring new logos.
2. Innovation & Technology: A Technology-First Proposition
Our ambition to be a technology-first business is at the heart of our
strategy. A key milestone in the first half was the launch of Language Weaver
Pro, our most advanced AI translation solution. Developed in partnership with
Cohere, Language Weaver Pro is the largest dedicated translation model in
production, with benchmarking tests showing it outperforming leading AI
translation tools. This powerful new solution, which forms the core of our
Language Intelligence capability, is designed for business-critical content
and delivers superior accuracy, fluency and security. Client interest has been
strong and we have signed some initial new client deals which are expected to
start contributing to revenues in the second half.
Our leadership in innovation was also underscored by the granting of two new
AI-based patents that support enhanced translation productivity.
Further strengthening our technology proposition, post-period end in early May
2026 we completed the acquisition of Obviously Group Limited ("Obviously").
Obviously provides a next-generation, AI-enabled platform that allows
enterprise clients to seamlessly manage, protect and enforce their
intellectual property and brand integrity. This acquisition is a significant
step forward, expanding our total addressable market by c.£2bn and
positioning RWS as a provider of an innovative end-to-end brand lifecycle
technology solution. By integrating Obviously's capabilities, we can offer our
clients a unified "Global Brand Guardianship" platform, creating significant
new revenue opportunities across our Protect and Transform segments.
3. Efficiency: Driving a Competitive Cost-to-Serve
We continue to improve efficiency across the Group to enable a competitive
cost-to-serve, protect margins in the near-term and support margin improvement
in the medium-term. Our ongoing programme includes the rationalisation of
processes, the scaling of offshore delivery centres and implementation of more
optimised, automated workflows. This discipline, combined with strong cost
control, has been a key contributor to our improved profitability in the first
half and will remain a core focus in the second half.
H1 Operating Review
HY26 Generate (£m) Transform (£m) Protect (£m)
Revenue 99.4 210.1 50.7
Reported growth +44.7% -7.2% +3.0%
OCC¹ growth +52.0% -4.6% +3.3%
Adjusted operating profit 16.3 10.2 5.1
Generate
The Generate segment provides solutions that enable organisations to organise,
enrich and meticulously manage the publication of their content and data.
While generative AI empowers content creation at scale, RWS ensures 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. Generate, which comprises our TrainAI and Content Technology
business units, delivered an exceptional performance in the first half, with
revenues of £99.4m (HY25: £68.7m), representing 28% of Group revenues (HY25:
20%).
Revenue growth on an OCC¹ basis was 52%, driven by the TrainAI business,
which benefited from exceptional revenues from an additional programme with an
existing client and initial revenues from a newly won global technology
client. We also recently secured a further new logo, with revenues expected in
H2. A higher proportion of these programmes are premium in nature, involving
red-teaming, RLHF and model refinement, allowing clients to benefit from the
Group's established and extensive network of domain experts across the world.
In parallel, RWS's enterprise-grade security and privacy, together with its
strong ethical practices in the sourcing and quality checking of data for
clients' AI models are clear differentiators.
In the Content Technology business, there were new client wins for Tridion
Docs and Propylon. We achieved our first state government client win in
Australia for the latter's legislative content management platform and opened
an office in Adelaide, giving us a local presence for future growth in the
Asia-Pacific region. In H2 we are launching Tridion Agent, giving customers a
governed framework to build and deploy specialist AI agents grounded in their
own content and integrated with the Tridion product suite.
Adjusted operating profit³ for the Generate segment was £16.3m (HY25:
£13.7m), driven by higher gross profit from TrainAI's exceptional topline
growth, offset by continuing investment in TrainAI infrastructure and lower
topline performance in Content Technology. H2 cost actions in the Content
Technology business, already underway, are expected to contribute to an
improved full year profit performance.
Transform
Transforming content to make it engaging, understandable and compliant 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 localisation, software
internationalisation, internal communications, marketing campaigns, legal
documentation, compliance and testing and security protocols. Enterprises now
demand customised and integrated language solutions capable of delivering
high-quality translations at unprecedented speeds. They also value the
guarantee that we will operate in a secure environment and maintain the
privacy of their assets.
The Transform segment, comprising all our localisation services and
technologies, saw HY26 revenue of £210.1m (HY25: £226.4m), representing 58%
of Group revenues (HY25: 66%). As anticipated, OCC¹ revenue in Transform
declined (by 4.6%) as we continue our strategic pivot towards technology-first
solutions. Our services business demonstrated resilience and we secured a
number of new logos in the life sciences, business services, retail and
manufacturing verticals. We also achieved a significant new client win with a
global manufacturer of energy infrastructure. At the end of the period, we
demonstrated our ability to pivot successfully with a technology-led renewal
with a global life sciences client, supporting them in their technology
journey and opening up future potential revenue streams from other RWS
solutions.
We continue to focus on building new products that harness generative LLM
capabilities that we expect to monetise from FY27 onwards. Our focus for the
second half is on accelerating sales and delivering further cost efficiencies
in client services and language and delivery.
Adjusted operating profit³ for Transform was £10.2m (HY25: £8.7m), driven
by more efficient delivery and overhead savings partially offset by lower
gross profit, as a result of a higher than anticipated proportion of services
revenues.
Protect
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's offering covers renewals and
recordals, allowing us to support clients through the entire IP lifecycle. The
Protect segment, comprising all our IP Services, performed well, with revenue
of £50.7m in the first half (HY25: £49.2m), representing 14% of Group
revenues (HY25: 14%).
Protect delivered 3.3% OCC¹ revenue growth, broadly in line with our
expectations, underpinned by a strong performance in the Renewals business. We
secured new logos across a range of end markets and enjoyed particular success
in the APAC region. This reflects the increasing impact of the investment in
sales leadership that we made in FY25. We exited the first half with
encouraging momentum and our focus for H2 will be on launching new services to
further accelerate growth. As noted above, we expect the acquisition of
Obviously to make an increasingly important contribution to the Protect
segment in future years. For the second half, the focus is on integration
planning and starting to take advantage of cross-sell opportunities.
Adjusted operating profit³ for the Protect segment was £5.1m (HY25: £8.1m),
driven principally by higher than anticipated Renewals revenues, which are
lower gross margin, and an increase in overhead cost, reflecting people and
technology investment to support future growth.
People
Our colleagues are central to the successful execution of our strategy, and we
continue to invest in creating a high-performance, collaborative, AI-first
culture. In January we held our inaugural Innovation Week at our Cluj office,
with expert sessions, technology insights and the finals of a two-week
hackathon, with more than 50 working demos developed by cross-functional teams
across the business. We are supporting all our colleagues on their AI
journeys, whatever their start point, with extensive training programmes,
access to tools and insights and examples of how AI is being successfully used
across the Group. I would like to thank all colleagues across RWS for their
continued dedication, focus and effort as we transform the business.
During the first half we continued to strengthen leadership across the Group,
recruiting new talent into the Product and Technology function, the Protect
segment and Go-to-Market team in particular. We significantly strengthened our
senior leadership with three key appointments designed to support our
strategic objectives.
At Executive Team level, Stephen Lamb joined as Chief Financial Officer in
March. With 25 years' experience in high-growth, listed international business
services, Stephen brings a wealth of expertise in strategic planning, M&A,
and building and developing finance teams. To accelerate growth across the
Americas, a core market for our Transform segment, we appointed Brajesh Jha as
CEO of the Transform Business Unit for the Americas, effective 1 May 2026.
Brajesh brings extensive leadership experience across technology, services and
global enterprise organisations.
Reflecting the strategic importance of India, which is home to c.20% of our
workforce, we appointed Ravi Chandran Krishnadas as Senior Vice President
& Country Lead. Ravi's role will be to bring our India teams together
under a shared purpose - ensuring operational excellence, nurturing a unified
culture and maximising commercial opportunities by strengthening our external
presence and developing key partnerships.
At 31 March 2026, the number of full-time equivalent colleagues in the Group
was 7,499⁴ (HY25: 7,990).⁴ Voluntary attrition for the 12 months to 31
March 2026 fell to 9.0%, a positive trend reflecting our efforts to improve
employee engagement (HY25: 10.5%).
ESG
RWS remains committed to its environmental, social, and governance ("ESG")
responsibilities. We continue to make progress towards our Science Based
Targets initiative ("SBTi") approved greenhouse gas (GHG) emissions reduction
targets. Our Scope 1, 2 and 3 emissions have decreased slightly year on year,
and we anticipate this trend to continue through to the end of FY26. Our
primary focus also remains on the safety and security of our teams operating
in regions of geopolitical instability.
Current Trading & Outlook
The Group has made a good start to the second half and continues to trade in
line with expectations for the full year. Current FX rates, after hedging, are
expected to have a c.£2m adverse impact on full year PBT, alongside the
anticipated £1m in-year impact from the Obviously acquisition which is
expected to start contributing during FY27.
We expect to deliver mid-single-digit revenue growth on an OCC¹ basis,
improving profitability (with a similar H2 weighting to prior year) and
continued strong free cash flow conversion for the full year as we benefit
from recent client wins, growth in Generate and Protect and our efficiency
programme.
Benjamin Faes
Chief Executive Officer
11 June 2026
RWS Holdings plc: Condensed Consolidated Statement of Comprehensive Income
6 months ended 31 March 2026 6 months ended
(Unaudited) 31 March 2025
Note £ (Unaudited)
£
Revenue 2 360.3 344.3
Cost of sales (210.3) (195.1)
Gross profit 150.0 149.2
Administrative expenses (157.1) (159.2)
Operating loss (7.1) (10.0)
Analysed as:
Operating profit before charging: 26.4 20.7
Exceptional items - acquisition-related costs 4 (0.2) (2.8)
Exceptional items - other 4 (11.0) (4.7)
Share-based payment expenses (2.1) (1.6)
Amortisation of acquired intangibles (20.2) (21.6)
Operating loss (7.1) (10.0)
Net finance costs 3 (2.4) (2.7)
Loss before tax (9.5) (12.7)
Tax credit 5 2.0 1.4
Loss for the period from continuing operations attributable to the equity (7.5) (11.3)
holders of the parent company
Other comprehensive (expense)/income
(Loss)/gain on retranslation of foreign operations (net of deferred tax) (7.7) 17.1
Loss on cash flow hedges (net of deferred tax) (0.6) -
Total other comprehensive (expense)/gain (8.3) 17.1
Total comprehensive (expense)/gain attributable to owners of the Parent (15.8) 5.8
Basic loss per ordinary share (pence per share) 7 (2.0) (3.1)
Diluted loss per ordinary share (pence per share) 7 (2.0) (3.1)
RWS Holdings plc: Condensed Consolidated Statement of Financial Position
31 March 2026 (Unaudited) 31 March 2025 30 September 2025
£m (Unaudited) (Audited)
Note £m £m
Assets
Non-current assets
Goodwill 491.4 582.6 485.9
Intangible assets 249.5 298.9 276.7
Property, plant and equipment 7.7 12.8 9.0
Right-of-use assets 16.7 20.0 19.7
Non-current income tax receivable 2.1 2.1 2.1
Deferred tax assets 1.8 2.1 1.7
769.2 918.5 795.1
Current assets
Trade and other receivables 217.1 206.5 204.3
Assets held for sale 3.5 - 3.5
Income tax receivable 3.0 6.1 5.4
Cash and cash equivalents 8 33.7 69.5 32.6
257.3 282.1 245.8
Total assets 1,026.5 1,200.6 1,040.9
Liabilities
Current liabilities
Trade and other payables 149.2 143.6 137.6
Lease liabilities 5.2 5.0 5.6
Foreign exchange derivatives 0.6 1.6 -
Income tax payable 7.1 9.8 10.6
Provisions 5.8 5.5 10.3
167.9 165.5 164.1
Non-current liabilities
Loans 9 66.2 96.5 58.0
Lease liabilities 14.6 18.6 16.9
Trade and other payables - - 0.1
Provisions 1.2 1.5 1.4
Deferred tax liabilities 27.8 48.6 37.2
109.8 165.2 113.6
Total liabilities 277.7 330.7 277.7
Total net assets 748.8 869.9 763.2
Equity
Capital and reserves attributable to owners of the parent
Share capital 3.7 3.7 3.7
Share premium 57.1 56.0 56.0
Share-based payment reserve 10.1 8.0 9.3
Reverse acquisition reserve (8.5) (8.5) (8.5)
Merger reserve 624.4 624.4 624.4
Foreign currency reserve (18.0) (14.7) (26.3)
Other reserve 0.1 0.1 0.1
Retained earnings 79.9 200.9 104.5
Total equity 748.8 869.9 763.2
Financial Review
Profit & Loss
Group reported revenue increased by 5% to £360.3m (H1 2025: £344.3m). On an
OCC basis, revenue grew by 7%, driven primarily by exceptional performance in
our TrainAI business and good growth in Protect.
Gross profit was £150.0m (H1 2025: £149.2m). The gross margin of 41.6% was
1.7 percentage points lower than the prior year (H1 2025: 43.3%). This was
primarily driven by relative outperformance of lower-margin TrainAI work and a
less favourable comparative in higher-margin Content Technology.
Adjusted profit before tax³ ("PBT") increased by 33% to £24.0m (H1 2025:
£18.0m). This strong performance reflects the growth in revenue and
disciplined overhead control, which more than offset the decline in gross
margin.
The statutory operating loss of £7.1m (H1 2025: £10.0m loss) reflected the
strong growth in adjusted operating profit offset by amortisation of acquired
intangibles, share based payments charges and acquisition related expenses
together with an increase in other exceptional costs to £11.0m (H1 2025:
£4.7m). Other exceptional costs principally reflect investment in the
structural efficiency improvements that are already improving our
cost-to-serve and will contribute to margin accretion in the medium term.
These costs included people-related restructuring activity and the costs
associated with the Group's transition to a far more rationalised and
Cloud-based IT infrastructure. Exceptional costs in the second half of the
year are expected to be at similar levels.
Taxation
The adjusted effective tax rate⁵ for the Group was 25.0% (H1 2025: 25.6%).
Currency & FX
The Group generated approximately 70% of its revenue in USD in the period and,
as such, the Group's reported results were impacted by foreign exchange
headwinds, primarily from the strengthening of GBP against the USD. This had
an adverse impact on revenue of approximately £7m in the first half. The
global nature of the Group's services means that its costs are incurred in
multiple currencies. We continue to actively manage our USD surplus cashflows,
our policy being to hedge c.50% of our net surplus on an annual basis. Based
on current and expected average FX rates for the second half and after
hedging, we anticipate a negative c.£2m impact on adjusted PBT for the full
year from foreign exchange.
Cash Flow
Cash generation continues to be strong. The Group's operational cash
conversion was 67% (H1 2025: 92%), with the high comparative figure in the
prior period skewed by working capital improvements relative to half-year
income. We expect full year operational cash conversion to be within the
normal range. After funding the final dividend for FY 2025 (£17m), capex
(c.£7m), and exceptional items (c.£11m), the Group's net debt position
remained modest.
Net assets
Net assets decreased to £748.8m (FY 2025: £763.2m), driven by lower
non-current asset balances at £769.2m (FY 2025: £795.1m). This reflects
changes in goodwill and intangible assets, with the reduction in goodwill
arising from foreign exchange translation, alongside ongoing amortisation of
intangibles and right-of-use assets. Working capital increased by £1.2m to
£67.9m (FY25: £66.7m), reflecting disciplined management. Deferred tax
liabilities reduced by £9.4m to £27.8m (FY25: £37.2m), due to the unwind of
amortisation of historic acquired intangibles.
Net debt
At 31 March 2026, the Group had net debt⁶ of £32.5m (FY 2025: £25.4m). The
Group remains well-capitalised with strong cash generation and significant
liquidity, supported by our revolving credit facility, which was successfully
refinanced in October 2025. This provides us with the financial flexibility to
continue to invest in our strategic priorities and pursue disciplined,
value-accretive M&A. In addition to its cash reserves, the Group had drawn
US$91.0m of its US$285.0m banking facility, leaving headroom of US$194.0m at
the period end and total liquidity of £290.1m.
Post period end, the Group paid an initial cash consideration of £16.5m for
the acquisition of Obviously.
Dividend
The Board has approved an interim dividend of 1.75p per share (HY25: 2.45p).
The Board announced a rebasing of the dividend in December 2025. Post the
rebasing of the dividend, aligning the payout with performance to fund the
Group's technology-led growth, the Board's expectation is to maintain the
progressive dividend going forward. The dividend will be paid on Friday, 17
July 2026, to shareholders on the register at Friday, 19 June 2026. The
ex-dividend date is Thursday, 18 June 2026.
1. Adjusted to reflect a like-for-like comparison between reporting
periods and assumes constant currency across both reporting periods.
2. For the Top 100 clients, by revenue.
3. 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.
4. Calculated as number of leavers during the financial year, on a
rolling last twelve months basis, divided by average headcount over the same
period; HY25 number restated to exclude contractors, freelancers and other
casual workers
5. 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.
6. Net debt comprises cash and cash equivalents less loans but before
deducting lease liabilities.
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 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
At 30 September 2025 3.7 56.0 599.0 104.5 763.2
Loss for the period - - - (7.5) (7.5)
Gain on retranslation of foreign operations - - 8.3 - 8.3
Total comprehensive income/(expense) for the period ended 31 March 2026 - - 8.3 (7.5) 0.8
Issue of shares (net of issue costs) - 1.1 - - 1.1
Dividends - - - (17.1) (17.1)
Exercise of share options - - (1.1) - (1.1)
Share-based payments expense - - 1.9 - 1.9
At 31 March 2026 (unaudited) 3.7 57.1 608.1 79.9 748.8
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 2024 8.1 (8.5) 624.4 (31.8) - 0.1 592.3
Other comprehensive income for the period ended 31 March 2025 - - - 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
At 30 September 2025 9.3 (8.5) 624.4 (26.3) - 0.1 599.0
Other comprehensive income for the period ended 31 March 2026 - - - 8.3 - - 8.3
Exercise of share options (1.1) - - - - - (1.1)
Share-based payments expense 1.9 - - - - - 1.9
At 31 March 2026 (unaudited) 10.1 (8.5) 624.4 (18.0) - 0.1 608.1
RWS Holdings plc: Condensed Consolidated Statement of Cash Flows
6 months ended 31 March 2026 6 months ended 31 March 2025
(Unaudited) (Unaudited)
Note £ £
Cash flows from operating activities
Loss before tax (9.5) (12.7)
Adjustments for:
Depreciation of property, plant and equipment 1.9 2.1
Amortisation of right-of-use assets 2.9 3.4
Amortisation of intangible assets 34.7 33.5
Amortisation of debt issue costs 0.1 0.3
Share-based payment expense 2.1 1.6
Finance (income) (0.3) (0.5)
Finance expense 2.7 3.0
Fair value movement on derivatives 0.6 1.6
Operating cash flow before movements in working capital 35.2 32.3
(Increase)/decrease in trade and other receivables (11.7) 2.3
Decrease in trade and other payables 6.3 11.7
Cash generated from operating activities 29.8 46.3
Income tax paid (8.3) (9.1)
Net cash inflow from operating activities 21.5 37.2
Cash flows from investing activities
Interest received 0.3 0.5
Disposal proceeds - 5.0
Purchases of property, plant and equipment (0.7) (1.5)
Purchases of intangibles assets (5.8) (10.3)
Net cash outflow from investing activities (6.2) (6.3)
Cash flows from financing activities
Net movement on existing debt 8.2 21.8
Interest paid (1.9) (3.0)
Lease liability payments (3.4) (5.3)
Dividends paid 6 (17.0) (36.9)
Net cash outflow from financing activities (14.1) (23.4)
Net increase in cash and cash equivalents 1.2 7.5
Cash and cash equivalents at beginning of the period 32.6 61.5
Exchange (losses)/gains on cash and cash equivalents (0.1) 0.5
Cash and cash equivalents at the end of the period 8 33.7 69.5
Notes to the Condensed Consolidated Financial Statements
1 Basis of preparation
General information
RWS Holdings plc is the holding company of a number of subsidiaries which
provide patent translations, intellectual property support services,
high-level technical and commercial translations, localisation and linguistic
validation services.
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 2025 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 2026 were approved by the Directors on 10 June 2026.
Basis of preparation
The condensed consolidated interim financial report is for the six months
ended 31 March 2026. 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 2025.
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 2025.
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 2026. 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 2026, the Group's balance sheet reflects a net asset position of
£748.8m and the liquidity of the Group remains strong with £33.7m of cash
and cash equivalents. The Group has a $285m Revolving Credit Facility (RCF)
maturing in October 2029. At the period end, $91m of this RCF is undrawn.
At 31 March 2026, the Group is in a net debt position excluding lease
liabilities of £32.5m (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, having performed their assessment through to 30 September
2027, which is at least 12 months from the date of authorisation of these
interim financial statements. Accordingly, the Group continues to adopt the
going concern basis in 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 2025 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 2025 Annual Report and Financial Statements. These are
technology an AI, competition, talent, failure to deliver profitable growth,
data services business model, data, privacy and AI regulation, cyber security,
FX and currency volatility, failure to simplify business , legislative and
regulatory compliance and geopolitical.
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 2025 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 2026 (Unaudited) ended
£m 31 March 2025 (Unaudited)
£m
At a point in time 29.6 23.8
Over time 330.7 320.5
Total revenue from contracts with customers 360.3 344.3
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 allocate resources. Following the
introduction of the Group's new operating model on 1 October 2025, as outlined
in the FY 2025 Annual Report, the Group's reportable segments have been
updated to align with this structure. The Board now monitors performance
across four reportable segments, assessing each based on revenue and adjusted
profit before tax, 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:
· Generate: Revenue is generated through the provision of
AI-enabled language and content technologies, including neural machine
translation, content creation tools and advanced localisation platforms that
support clients in generating multilingual content at scale.
· Transform: Revenue is derived from the delivery of localisation
and content transformation services, including translation, adaptation and
optimisation of content across a wide range of media and formats to ensure
cultural and brand consistency.
· Protect: The Group's Protect segment provides intellectual
property support services, including patent translation, filing and a broad
range of IP search and analytics services designed to help clients protect and
manage their innovations globally.
· Corporate: Corporate comprises central Group functions, including
executive management, finance, legal and other support services, which are not
directly attributable to the operating segments.
Unallocated costs reflect corporate overheads and other expenses not directly
attributed to segments. The prior period comparative information has been
restated based on these new operating segments.
Segment results for the 6 months
ended 31 March 2026 (Unaudited)
Corporate
Generate Transform £m Group
£m £m Protect £m
£m
Revenue 99.4 210.1 50.7 0.1 360.3
Operating profit/(loss) before charging: 16.3 10.2 5.1 (5.2) 26.4
Exceptional items - acquisition-related costs - - - (0.2) (0.2)
Exceptional items - other - - - (11.0) (11.0)
Share-based payments expenses - - - (2.1) (2.1)
Amortisation of acquired intangibles - - - (20.2) (20.2)
Operating profit/(loss) 16.3 10.2 5.1 (38.7) (7.1)
Net finance expense (2.4)
Loss before taxation (9.5)
Tax credit 2.0
Loss for the period (7.5)
Segment results for the 6 months
ended 31 March 2025 (Unaudited)
Corporate
Generate Transform £m Group
£m £m Protect £m
£m
Revenue 68.7 226.4 49.2 - 344.3
Operating profit/(loss) before charging: 13.7 8.7 8.1 (9.8) 20.7
Exceptional items - acquisition-related costs - - - (2.8) (2.8)
Exceptional items - other - - - (4.7) (4.7)
Share-based payments expenses - - - (1.6) (1.6)
Amortisation of acquired intangibles - - - (21.6) (21.6)
Operating profit/(loss) 13.7 8.7 8.1 (40.5) (10.0)
Finance expense (2.7)
Loss before taxation (12.7)
Tax credit 1.4
Loss for the period (11.3)
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 £1.1m (HY25: £1.3m).
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 2026 31 March 2025
(Unaudited) (Unaudited)
£m £m
Net trade receivables 117.7 119.8
Net contract assets (accrued income) 73.7 62.8
Total contract assets 191.4 182.6
Contract liabilities (deferred income) 50.4 47.7
Total contract liabilities 50.4 47.7
3 Net finance costs
6 months 6 months
ended ended
31 March 2026 31 March 2025
(Unaudited) (Unaudited)
£m £m
Net finance costs
Net bank interest payable 1.9 2.0
Lease interest 0.4 0.5
Amortisation of borrowing costs 0.1 0.2
Net finance costs 2.4 2.7
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 2026 31 March 2025
(Unaudited) (Unaudited)
£m £m
Acquisition-related costs 0.2 2.8
Other exceptional items 11.0 4.7
Total exceptional items 11.2 7.5
Other exceptional items
A description of the principal items included is provided below:
Group Transformation Programme - £3.3m - including costs related to
transitioning our current on-premises infrastructure to a modern cloud-based
environment
Strategic project costs - £0.3m - costs involved in corporate development
opportunities.
Restructuring and integration costs - £7.5m - related to severance and
termination payments related to the Group's cost reduction plans, and other
corporate restructuring initiatives.
In HY25, other exceptional costs of £4.7m is made up of restructuring costs
of £4.6m and finance cost amortisation of £0.1m.
Acquisition-related costs
Acquisition-related costs of £0.2m (HY25: £2.8m) consists of costs
associated with the acquisition of Papercup's Intellectual property. 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 2025.
In the prior period, acquisition costs 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.
5 Taxation
6 months 6 months
ended ended
31 March 2026 31 March 2025
(Unaudited) (Unaudited)
£m £m
Current taxation 7.3 4.9
Deferred taxation (9.3) (6.3)
Tax credit (2.0) (1.4)
Effective tax rate
The effective tax rate on reported profit before tax was 20.5% (HY25: 11.0%).
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 certain
exceptional costs, which reduced the reported tax credit.
The adjusted tax charge was £6.0m (HY25: £4.6m) giving an adjusted effective
tax rate of 25.0%(HY25: 25.6%) on adjusted profit before tax of £24.0m (HY25:
£18.0m). 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 2026 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 £4.4m at 31 March 2026 (HY25:
£6.4m).
6 Dividends
An interim dividend of 1.75p (HY25: 2.45p) per ordinary share will be paid on
17 July 2026 to shareholders on the register at 19 June 2026. The ex-dividend
date is 18 June 2026.
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 2026.
The interim dividend will reduce shareholders' funds by an estimated £6.5m
(HY25: £9.0m).
Dividends paid in the period were £17.0m (HY25: £36.9m).
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 2026 31 March 2025
Earnings per ordinary share - basic (p) (2.0) (3.1)
Earnings per ordinary share - diluted (p) (2.0) (3.1)
Adjusted earnings per ordinary share - basic (p) 4.9 3.6
Adjusted earnings per ordinary share - diluted (p) 4.9 3.6
6 months ended
6 months ended 31 March 2025
31 March 2026 Earnings
Earnings £m
£m
(7.5) (11.3)
Profit for the period
Adjustments: 21.6
Amortisation of acquired intangibles 20.2
Share-based payment expenses 2.1 1.6
Exceptional items 11.2 7.5
Tax effect of adjustments (8.0) (6.0)
Adjusted profit attributable to equity holders of the parent 18.0 13.4
6 months ended 31 March 2025
6 months ended
31 March 2026
370,270,759 369,115,317
Weighted average number of ordinary shares in issue for basic earnings
Dilutive impact of share options - -
Weighted average number of ordinary shares for diluted earnings 370,270,759 369,115,317
8 Cash and cash equivalents
31 March 31 March 30 September 2025
2026 2025 (Audited)
(Unaudited) (Unaudited) £m
£m £m
Cash at bank and in hand 25.6 58.8 25.9
Short-term deposits 8.1 10.7 6.7
Cash and cash equivalents in the cash flow statement 33.7 69.5 32.6
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 2025 Effects of Non-cash movements
£m cash flows £m 31 March 2026
£m (Unaudited) £m
1.2 (0.1) 33.7
Cash & cash equivalents 32.6
Issue costs 1.0 1.2 (0.4) 1.8
Loans (current and non-current) (59.0) (9.0) - (68.0)
Net debt (excluding lease liabilities) (25.4) (6.6) (0.5) (32.5)
Lease liabilities (22.5) 3.4 (0.7) (19.8)
Net debt (including lease liabilities) (47.9) (3.2) (1.2) (52.3)
At 31 March 2026, the Group is in a net debt position, excluding lease
liabilities, of £32.5m 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 22 January 2026, 8,372,226 options ("Options") over ordinary shares of 1
pence each in the Company ("Shares") were granted under the RWS Holdings plc
Long Term Incentive Plan ("LTIP") to certain key senior executives and
employees of the Group. On 25 March 2026 a further 1,219,241 Options were
granted to the CFO.
The extent to which the Options will vest depends on the following performance
metrics, each with a 50% weighting: (i) performance in the period from 1
December 2025 to 30 November 2028 for total shareholder return ('TSR') targets
and (ii) the performance for the three financial years ending with FY 2028 for
earnings per share ('EPS') targets.
On 22 January 2026, a bonus share award of 189,776 Shares was awarded to the
CEO in respect of performance year 2025, these shares vested on 22 January
2026.
On 25 March 2026, a buy-out award of 168,366 Shares was awarded to the CFO,
these shares vested on 25 March 2026.
On 12 February 2026, 997,552 share options were granted under the Group's UK
SAYE scheme, which in normal circumstances will mature on 1 April 2029
following the three-year savings period and which remains 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 £nil (HY25: £216k) to subsidiaries of Learning
Technologies Group Limited (LTG), a company in which Andrew Brode, the Group's
Interim Chairman, has a significant interest. £nil (HY25: £134k) 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 2025.
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 2026 and 31 March 2025, 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
2026 (Unaudited) 2025 (Unaudited) £m 2025
£m (Audited)
£m
Assets
Forward foreign currency exchange contracts - - -
Liabilities
Forward foreign currency exchange contracts (0.6) (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
On 5 May 2026, the Group acquired 100% of the issued share capital of
Obviously Group Limited for an initial cash consideration of £16.5m with
earn-out consideration of up to an aggregate amount of £23.5m, with total
consideration capped at £40m. Obviously Technology is an AI-enable technology
platform that integrates Intellectual Property and brand management,
protections and enforcement. As the transaction completed after the reporting
date of 31 March 2026, it is treated as a non-adjusting subsequent event.
Accordingly, no amounts have been recognised in these financial statements.
The Group has no other 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).
• Adjusted EBITDA: Adjusted profit before tax, interest,
depreciation and amortisation.
• Operational free cash flow: adjusted EBITDA plus change in working
capital less lease payments and capex
• Operational free cash flow conversion: operational free cash flow,
divided by adjusted EBITDA
• 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 HY26 HY25
£m £m
Statutory loss before tax (9.5) (12.7)
Exceptional items - acquisition-related costs 0.2 2.8
Exceptional items - other 11.0 4.7
Share-based payments expense 2.1 1.6
Amortisation of acquired intangibles 20.2 21.6
Adjusted profit before tax 24.0 18.0
Operational free cash flow reconciliation HY26 HY25
£m £m
Adjusted EBITDA 45.7 38.1
Change in working capital (5.4) 14.0
Lease payments (3.4) (5.3)
Capital expenditure (6.5) (11.8)
Operational free cash flow 30.4 35.0
Operating cash conversion reconciliation HY26 HY25
£m £m
Operational free cash flow 30.4 35.0
Adjusted EBITDA 45.7 38.1
Operating cash conversion 67% 92%
HY26 HY25
Adjusted effective tax rate £m £m
Tax credit (2.0) (1.4)
Tax on amortisation of acquired intangibles 4.9 4.8
Tax on exceptional items 2.6 1.0
Tax on share-based payments 0.5 0.2
Adjusted tax charge 6.0 4.6
Adjusted profit before tax 24.0 18.0
Adjusted effective tax rate 25.0% 25.6%
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.
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