RWS Annual Report 2022 web - Flipbook - Page 41
REVENUE
GROSS PROFIT
Overall in FY22 the Group generated revenues of
£749.2m, which is 8% higher than FY21. Revenue in FY22
benefited from an additional month of trading from SDL,
which was acquired in November 2020. Excluding this
impact, revenue growth was 3%. The strengthening of the
US Dollar when compared to prior year also supported
revenue in local sterling currency. On an organic constant
currency (OCC) basis revenues are 1% lower than those
achieved in FY21.
Gross profit increased by 12% to £350.2m, delivering a
gross margin of 46.7%. This represents an increase from
45.1% in the prior year, primarily as a result of the change
in revenue mix towards the higher gross margin division
of Language and Content Technology, increased use of
the Language eXperience Delivery, benefits from SDL
integration synergies, and favourable foreign exchange
movements with the strengthening of the US dollar
relative to a number of currencies.
In divisional terms, Language Services recorded £342.1m
in revenue, a 10% increase in total revenue and 1% on an
OCC basis. Reduced volume from certain of the largest
technology clients was more than offset by growth from
the Strategic Solutions Group. Regulated Industries
recorded £173.0m, an increase of 6%, although a decline
of 2% on an OCC basis. Reducing work for a significant
client and also stopping work for a number of unprofitable
clients impacted revenue. Language and Content
Technology had total revenue of £126.9m, an increase of
17% year on year and 5% OCC. Good growth was recorded
across the portfolio, despite the increase in SaaS revenues
which in the short term defers current year revenues to
future years. IP Services recorded £107.2m, a decrease of
6% on prior year and 10% on an OCC basis. The proposed
introduction of the Unitary Patent in the European Union,
which we forecast for H1 FY23, has impacted volumes in
the short term as clients look to defer filings.
The majority of the Group revenue, categorised by
geography, is in the US market, which accounts for 52%
of the total. Client concentration is such that no one client
accounts for more than 10% of Group turnover.
ADMINISTRATIVE EXPENSES
Administrative expenses have increased to £263.9m
(2021: £257.0m). Administrative expenses as a
percentage of revenue have decreased from 37% to 35%,
which reflects the impact of the integration activities
during the period. Adjusted administrative expenses
(gross profit less adjusted operating profit) increased by
£17.0m to £211.7m, a rise of 9% year on year. The extra
month of costs from SDL, combined with unfavourable
FX, more than offset the benefit of integration synergies.
Exceptional items of £12.5m were incurred during the
year, which includes £7.4m for IT integration and £3.2m
for severance, termination and other costs in relation
to the SDL integration. Acquisition costs of £2.1m, were
primarily related to the purchase of Liones Holding B.V.
during the period.
FINANCE COSTS
Net finance costs were £3.1m (2021: £2.4m). Net finance
costs have increased year on year due primarily to an
increase in interest payable on external debt of £0.6m,
driven by a rise in interest rates. On 3 August 2022, the
Group entered into an Amendment and Restatement
Agreement with its banking syndicate, which amended
its existing US$120m RCF maturing on 10 February 2024,
to a US$220m RCF maturing on 3 August 2026, with an
option to extend maturity to 3 August 2027. This gives
us further flexibility as we continue to grow our business
and seek selective acquisitions to enhance the Group's
capabilities and geographic reach. The debt refinancing
was accounted for as a debt modification without
extinguishment, resulting in a nominal debt modification
gain being recognised in the parent company's
statement of comprehensive income.
Gross profit increased by
12%
£350.2m
to
STRATEGIC REPORT RWS — Annual Report 2022
41
