For immediate
release
23 April 2024
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 2024 ("the first half"), ahead of the announcement of
its half year results on 12 June 2024.
Group performance
Organic constant currency ("OCC")¹
revenues declined by 2% in the period, an improving trend compared
to the prior year (H1 FY23: -7% and H2 FY23:
-5%). Reported revenue is expected to be £350m, down 4% on prior
year. Whilst we continue to see soft activity levels from certain
market segments, we are encouraged that two of our services
divisions have returned to growth and that we are seeing growing
traction with our AI-based solutions, supporting a number of new
business wins in the first half.
Adjusted profit before tax ("PBT")
is expected to be approximately £45m in the first half (H1 FY23:
£54m). This reflects weaker performance in some parts of our higher
margin businesses, an unfavourable mix of work in parts of Language
Services, ongoing investments and year-on-year foreign exchange
differences, partially mitigated by increased use of the Language
eXperience Delivery platform (LXD) and the cost reduction exercise
conducted in H2 FY23.
As previously indicated,
we continue to drive incremental revenues from our
growth initiatives across the Group and we expect
revenue to be stronger in the second half, supported by new
business wins across the business and some recovery in higher
margin parts of the business. We remain mindful of the wider
macroeconomic and geopolitical environment and the continuing
market pressures seen in the prior year, which is making visibility
in certain segments of our business less clear in the
short-term. However, our many years of investment in AI
solutions, both to improve outcomes for clients and to drive
internal efficiency, position us well to play a leading role and
navigate the AI-related transformation
we are seeing in our industry.
Cash generation continues to be
strong. On 31 March 2024, the Group had net debt² of £40m,
after payment during the first half of the £36m final dividend for
FY23, £30m under the share repurchase
programme and the planned higher level of investment in
transformation.
Divisional performance
Language Services returned to growth
on a constant currency basis, driven by a good performance in
Enterprise Services, particularly in TrainAI, where our major
global technology clients are increasingly benefiting from our data
services expertise. We also won our first TrainAI contracts in
other parts of the Group and, with an encouraging pipeline, we
anticipate TrainAI will make a further positive contribution to our
revenue growth rate in the second half. 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.
We are also encouraged by the impact
of Evolve, our pioneering linguistic AI solution. Evolve
combines RWS's language services expertise with
its translation management system (Trados Enterprise) and neural
machine translation technology (Language Weaver) alongside language
specialist-trained quality estimation and a finely tuned private
large language model. After a successful
beta program in which a number of clients participated, we are now
seeing early revenues from Evolve contracts with major clients.
With a healthy pipeline including several clients currently going
through proof of concept, we anticipate Evolve contributing to
second half revenues and becoming an important part of our
AI-enabled services portfolio.
In Language & Content Technology
we saw revenue contraction on a constant currency basis although
reported revenues increased, supported by good growth in Propylon.
We made positive progress in Linguistic AI, with a high level of
new bookings in Language Weaver. The
division's in-house R&D team led the development of the Evolve
solution and continues to roll out the range of available language
pairs available through Evolve. Weaker revenue performance in
content technology was driven by Tridion.
IP Services returned to growth on a
constant currency basis, driven by an encouraging performance in
the Eurofile segment with many patent filers remaining committed to
existing arrangements over the Unitary Patent. The division had
several wins in research and renewal work, demonstrating our
ability to serve clients across the IP lifecycle. The Group has
also agreed terms for the disposal of its interest in a revenue and
cost sharing arrangement, together with some associated assets,
relating to a patent information resource business known as
"PatBase" for £30m in cash, of which £5m is deferred and will be
payable at the latest six months after completion. Completion is
expected to take place in May.
In Regulated Industries revenue
declined on a constant currency basis, driven by a continuation of
the challenges previously noted in the Life Sciences segment, a
number of our larger clients going through cost-cutting exercises
and the non-repeat of some compliance work to meet regulatory
changes in financial services last year. In clinically-oriented
work in Life Sciences, we have seen continued growth from our
Linguistic Validation solutions.
Ian
El-Mokadem, CEO of RWS, commented:
"The Group's first half results
reflect good progress in a number of areas and signal that we are
well positioned for clients' increased appetite to harness AI to
meet their language and content needs. Our successes with TrainAI
and Evolve demonstrate that our AI-enabled solutions are resonating
with clients at this pivotal moment for our industry. Through our
unique combination of proprietary technologies and longstanding
linguistic expertise, we are uniting the best of human and
artificial intelligence to deliver innovative new offerings and
support internal efficiency.
"We are pleased to see that both
Language Services and IP Services have returned to growth. Our
growth initiatives, such as Linguistic Validation and eLearning,
are also delivering incremental revenue and we have seen
encouraging performance in Language Weaver, our long-established
AI-centred machine translation solution.
"It has been disappointing that we
have not seen the recovery in Regulated Industries as quickly as we
would have hoped and that sales in some parts of our content
management software business have been slower than planned. We
expect both to show some recovery in the second half.
"Delivery of the Board's full year
expectations remains dependent on continuing to successfully
leverage our growth initiatives and AI offerings to compensate for
ongoing headwinds in some areas."
Board Update
Following the departure of Lara
Boro, David Clayton has been appointed as Senior Independent
Director, with immediate effect.
Notes:
¹ OCC excludes the impact of
acquisitions and assumes constant currency.
² Net cash/net debt comprises
cash and cash equivalents less loans but before deducting lease
liabilities.
For further information, please
visit: www.rws.com.
RWS
Holdings plc
01753 480200
Ian El-Mokadem, Chief Executive
Officer
Candida Davies, Chief Financial
Officer
MHP
(Financial PR
advisor)
rws@mhpgroup.com
Katie Hunt / Eleni Menikou /
Catherine
Chapman
020 3128 8100
07884 494112
Deutsche Numis (Nomad & Joint
Broker)
020 7260 1000
Stuart Skinner / Will
Baunton
Berenberg (Joint Broker)
020
3207 7800
Ben Wright / Toby Flaux / Milo
Bonser
About RWS
RWS Holdings plc is a unique,
world-leading provider of technology-enabled language, content and
intellectual property solutions. 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 45+
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).