RWS ends year in line with market expectations

The AIM-traded firm said the growth also reflected “solid growth” in language services, and accelerated growth in language and content technology, despite the faster-than-anticipated transition towards software-as-a-service revenues.

It said the intellectual property services division had traded in line with previous guidance in the 12 months ended 30 September.

In its half year results, RWS highlighted a reduced volume of activity from some of the largest technology clients within the Enterprise Internationalisation Group in language services.

It said that continued in the second half, but added that it was “confident” in the “strong, long-term nature” of the relationships, and expected to see volumes recover in due course.

In regulated industries, while it continued to win new clients, the firm said it had decided to “gradually cease work” with a significant client, which reduced its volumes and moved into offering competing services.

The board said those headwinds were “more than offset” by favourable foreign exchange movements, particularly in the second half of the year.

RWS said it expected the 2022 financial year to deliver strong margin improvement, underpinned by both the realisation of synergies from the integration of SDL and a continuing increase in translation volumes going through its ‘Language eXperience Delivery’ platform.

The group also remained highly cash generative, and had net cash of £71m at year-end on 30 September, compared with £45.3m a year earlier.

In August, RWS amended and extended its revolving credit facility, giving it further flexibility as it continued to grow its business and seeked selective acquisitions to enhance its capabilities and geographic reach.

The facility was increased to $220m from $120m, on similar terms to its previous facility, with a maturity date of August 2026 and the option to extend it via an uncommitted $100m accordion, and for a further year.

RWS also noted that it had “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 and company secretary, and Terry Doyle as chief information officer.

Looking ahead, RWS said it was making “good progress” with executing on its organic growth levers, including growing e-learning and linguistic validation revenues.

It said it was also “encouraged” by the early impact of its pricing programme, and its focus on its transformation projects.

As a result, the board said the company was on track to deliver on the guidance that it set out at our capital markets day for revenue growth, margin, capital expenditure, cash conversion and return on capital employed for the 2023 financial year, and expected to maintain its progressive dividend policy.

“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,” said chief executive officer Ian El-Mokadem.

“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.”

El-Mokadem said the company retained 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.”

RWS said it would announce its full-year results in mid-December.

At 1233 BST, shares in RWS Holdings were up 12.23% at 310.2p.

Reporting by Josh White for Sharecast.com.