RWS Annual Report 2022 web - Flipbook - Page 21
Language and Content
Technology
Full ownership and accountability for product
groups drove accelerated growth, despite
faster-than-anticipated transition towards SaaS
revenues
The Language and Content Technology ("L&CT") division
accounted for 17% of Group revenues in the year (FY21:
15%). Revenues of £126.9m were 17% higher year on
year on a reported basis (FY21: £108.1m) and saw a 5%
increase on an organic constant currency basis, despite
the higher than anticipated increase in the proportion
of SaaS revenues, which holds back revenue during the
transition phase from perpetual to SaaS licences.
After an encouraging first half we moved to full
ownership and accountability for the leaders of the four
principal product areas – Language Weaver, Trados,
Tridion and Contenta – which drove a more focused and
successful approach in the second half. The division’s
accelerated growth plan resulted in a refined go-tomarket model for each product, aided by the stronger
link between product development and sales and
marketing. Leveraging the wider RWS client portfolio,
we have seen an increasing number of sales of language
and content technology solutions to services clients
across the Group.
Renewals and extensions were strong and we secured
a major new Tridion client – a provider of robotic
automation software. A major new release of our Trados
Studio product (a key productivity tool for individual
translators), incorporating hundreds of new features,
drove a positive outcome in the second half and
demonstrated our commitment to innovation across our
technology platform.
SaaS revenue growth for the year was 26% (FY21:
18%), ahead of our plan and reflecting the success of
a more targeted sales approach. The proportion of
SaaS revenues for the division is now 29% (FY21: 24%),
offering increased recurring revenue and improved
visibility.
In March 2022 we announced the acquisition of Fonto, a
structured content management business with a strong
roster of clients, complementing our Tridion proposition
and widening our proposition in this segment.
Integration of Fonto into the Group is on track.
The division’s adjusted operating profit 2 was £37.6m
(FY21: £25.9m), on a reported basis, reflecting the
growth in top-line revenues, supported by lower cloud
costs and some direct people cost savings, and despite
the greater proportion of SaaS revenues in the year.
2 Adjusted
operating profit is stated before amortisation of acquired
intangibles, acquisition costs, share- based payments expense and
exceptional items. See Note 4
IP Services
Lower revenue due to impact of
forthcoming introduction of Unitary
Patent, partially offset by solid growth in Worldfile
and other patent services
The IP Services division represented 14% of Group revenues in
the year (FY21: 16%). Revenues of £107.2m were 6% lower year
on year on a reported basis (FY21: £113.6m) and 10% lower on
an organic constant currency basis.
In line with guidance, the division continued to experience
weak demand as a result of the impending introduction of
the Unitary Patent (UP). As we noted in our HY22 results, the
European Patent Office (EPO) announced in January that it
would allow clients to delay the granting of patent applications
in order to benefit from protection under the UP. The latest
guidance from the EPO indicates that the UP will become
effective in the first half of 2023. We continue to engage with
clients and other stakeholders to understand their proposed
approach to the UP and its likely impact on the division.
Other segments, which account for approximately two-thirds
of the division's revenues, delivered modest growth, including
patent translation and filing outside Europe, IP Research and
our operations in Japan. The integration of Horn & Uchida
Patent Translation Ltd was successfully completed and will
support continued growth in East Asia. Revenues in China had
another very strong year, growing by 47%.
In line with lower revenues in our European patent translation
and filing business, we took actions in the first half to lower
our cost base. The division’s transformation programme
remains key to its longer-term prospects and we saw good
progress during the year on the design of the future state
operating model. The transformation will enhance many
aspects of our proposition and is expected to deliver
significant operating efficiencies.
We also restructured the division’s leadership team. In the first
half, we strengthened its sales capability and focus to help
drive penetration in renewals and better access to the patent
attorney segment, with encouraging results. We subsequently
secured new logos with clients from a diverse range of
verticals, including chemical manufacturing and agricultural
sciences; energy storage and battery manufacturing;
pharmaceutical and medical device; petroleum and natural
gas; and the world's largest producer of home appliances.
In November 2022 we announced the appointment of Daniel
Bennett as President, IP Services. Daniel, who is a proven
industry leader with more than 25 years’ international
experience in brand protection, covering a breadth of IP
and corporate security issues, will drive the next phase
of the division’s development, including delivery of the
transformation programme.
The division’s adjusted operating profit2 was £30.1m (FY21:
£32.3m) on a reported basis, reflecting the reduction in
top-line revenues, offset by good cost control and the positive
impact of the actions taken in the first half, which protected
profitability.
STRATEGIC REPORT RWS — Annual Report 2022
21
