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 2022 (“FY22”), ahead of the announcement of its full year results.

FY22 Performance

Group revenues in FY22 grew by approximately 8%, in line with market expectations¹, after including an additional month’s trading from SDL plc (“SDL”), which was acquired in November 2020. This increase also reflects solid growth in Language Services and accelerated growth in Language & Content Technology, despite the faster-than-anticipated transition towards SaaS revenues. The IP Services division has traded in line with previous guidance.

In the Group’s half year results, we highlighted a reduced volume of activity from certain of the largest technology clients within the Enterprise Internationalisation Group in Language Services. This continued in H2, however we remain confident in the strong, long-term nature of these relationships and expect to see these volumes recover in due course. In Regulated Industries, while we continue to win new clients, we have decided to gradually cease work with a significant client which reduced its volumes and moved into offering competing services. These headwinds have been more than offset by favourable FX movements, particularly in the second half of the year.

We expect FY22 to deliver strong margin improvement, underpinned by both the realisation of synergies from the integration of SDL and a continuing increase in the translation volumes going through our unique Language eXperience Delivery platform. The Group also remains highly cash generative and had net cash^² of approximately £71m at 30 September 2022, compared with £45.3m at 30 September 2021.

In August 2022 we amended and extended our revolving credit facility, giving us further flexibility as we continue to grow our business and seek selective acquisitions to enhance the Group’s capabilities and geographic reach. The facility has been increased from $120 million to $220 million, on similar terms to the Group’s previous facility, with a maturity date of August 2026 and the option to extend the facility via an uncommitted $100 million accordion and for a further year.

The Group has significantly reinforced the strength and diversity of its Board and Executive Team with the recent appointments of Julie Southern as Chairman Designate, Candy Davies as Chief Financial Officer, Jane Hyde as General Counsel & Company Secretary and Terry Doyle as Chief Information Officer.

Outlook

As we exit FY22, we are making good progress with executing on our organic growth levers, including growing eLearning and Linguistic Validation revenues. We are also encouraged by the early impact of our pricing programme and the Group’s focus on its transformation projects. We are therefore on track to deliver on the guidance that we set out at our Capital Markets Day for revenue growth, margin, capital expenditure, cash conversion and ROCE for FY23³. We also expect to maintain our progressive dividend policy.

Notice of Full Year Results

RWS will provide a further update with its full year results in mid-December 2022. To register your interest in attending the results presentation, please email rws@mhpc.com.

Ian El-Mokadem, Chief Executive Officer of RWS, commented:

“We have continued to progress the actions and investments that we set out at our Capital Markets Day in March, which underpin our medium-term strategy and five year accelerated growth plan.

“Whilst mindful of wider global economic uncertainty, we remain confident in the long-term nature of our market growth drivers and the overall resilience of the Group. We believe the current environment also presents an opportunity for us to strengthen our leadership in our markets, as a well-funded business of unique scale, sector diversification, footprint and capabilities. We retain the ability and appetite to make value-accretive acquisitions.

“We are very encouraged by the early signs of delivery against our growth initiatives and the impact of the simpler, more efficient and accountable organisational model we have put in place to deliver our strategy. With a strong leadership team in place, we are pushing ahead with energy to build an even more robust and growing business and we look forward to updating investors when we release our full year results.”

1. The latest Group-compiled view of analysts’ expectations for FY22 gives a range of £736.3m-£760.4m for revenue, with a consensus of £749.1m.
2. Net cash comprises cash and cash equivalents less loans but before deducting lease liabilities.
3. Capital Markets Day guidance for FY22-24 was revenue growth in line with market growth estimates of 4%; cash conversion of 80-85%; capital expenditure of 4-7% of revenue; and ROCE of 11-13%. Guidance at Capital Markets Day for adjusted PBT margin percentage confirmed a slight reduction in FY23, compared with FY22 and recovery in FY24 to match the FY22 level.